Working capital management

Working capital management

Working capital management

There are five main principles of the better management:
for working capital management coordination of the activity and the coordination of the interests of various divisions always are required. Construction of accurate divisions' interaction is more important than optimisation of activity of each of them separately;
perfection of management by a working capital - process continuous. It is connected both with constant change of environmental conditions, and with cyclical variations of criteria "perfection" which could be influenced by development strategy of the company, its bargaining position, a volume of business etc.;
working capital management closely related with the risks management both financial, and operational. It, on the one hand, allows to use risk-management mechanisms in management of a working capital, and on the other hand - requires to consider a dilemma "bigger income - bigger risk" in a choice of decisions;
basically direct carrying over of effective package solution of working capital management from one company to another is impossible. Though the decision for a separate plot, for example work with temporary free money resources or management of a warehouse of raw materials, can be useful and in other organisation;
the modern software and corresponding information infrastructure are necessary for search of effective decisions in management of a working capital and their subsequent realisation.
It is necessary to add that the fifth principle logically follows from first three:
it is necessary to receive and consolidate the information from many sources and to carry out the complex analysis of the data;
the information should be processed operatively, regulary and with reasonable expenditures of labour;
for calculations of indicators and comparison of efficiency of possible decisions easily recustomized software supporting difficult computing algorithms should be used.
In the conclusion, it would be desirable to draw following conclusions. Business automatzation gives the chance to the company to solve the problems of working capital management with the minimum time and labour expenses. On the basis of the data received by means of an information system, it is possible to count all possible variants and to make a logical, well-founded choice. A good example of similar uniform full-function system which including supports decisions of all problems mentioned in the article, system Oracle e-Business Suite can serve.