Why is Working Capital Management Critical in Today's Economic Environment?

In this podcast, Bob Shultz interviews Bruce Lynn, the COO of the Financial Executives Networking Group (FENG). Bruce is an expert in working capital management, with a long history in this area, as a consultant and conference speaker. The discussion focuses on the growing importance of working capital in the current economic climate. The point is made that a company’s working capital not just about profits but about how to maintain adequate liquidity and cash flow. Though the responsibility for this crucial function should ideally fall to a dedicated VP of Working Capital or the Treasurer, the conversation highlights that effective working capital management is a "team sport" involving various departments like credit, sales, accounting, and treasury. They also covers the importance of frequent monitoring, potentially on a daily or weekly basis, the role of AI-driven technology for data analysis and operational transparency, and the need for caution against an over-reliance on tech without proper context and metrics. The discussion concludes with an examination of how banks view a company's working capital management when making lending decisions, suggesting that building internal cash reserves may be increasingly important.