Working Capital
Effective working capital management is one of the most powerful levers a business can pull to improve cash flow, reduce costs and unlock funds for growth. However, many organizations face challenges with cash trapped in accounts receivable, inefficiencies in accounts payable, and excess or misaligned inventory levels. These issues not only strain liquidity but also hinder a company’s ability to remain agile, invest in strategic initiatives and build resilience in volatile markets.
At L.E.K Consulting, we take a comprehensive, hands-on approach to working capital optimization. By leveraging advanced analytics, process improvements and industry-specific expertise, we help businesses accelerate cash flow, streamline operations and maximize liquidity, without compromising relationships with customers or suppliers. Our tailored solutions focus on measurable results, ensuring sustainable improvements across the cash conversion cycle while supporting long-term growth. Elements of those solutions typically include the following:
Accounts receivable optimization
Managing accounts receivable effectively ensures faster cash collection, reduced overdue balances and stronger liquidity. We help companies:
- Reduce days sales outstanding (DSO): Implement proactive collection strategies, prioritizing high-value and overdue accounts with structured escalation processes
- Streamline invoicing and dispute resolution: Automate invoice generation and dispute management to ensure accuracy, faster billing cycles and quicker issue resolution
- Leverage early payment incentives: Design tailored programs, such as discounts for early payments, to encourage prompt settlements without eroding margins unnecessarily
Accounts payable optimization
A well-optimized accounts payable process allows businesses to retain cash longer, improve cash forecasting and reduce unnecessary outflows. We help companies:
- Maximize days payable outstanding (DPO): Negotiate favorable payment terms with suppliers to extend cash outflows without disrupting supply continuity
- Implement “pay on time, never early” policies: Ensure cash is retained as long as possible by aligning payments with negotiated due dates while avoiding penalties
- Segment suppliers for efficiency: Prioritize critical suppliers for early payment discounts while optimizing terms for noncritical vendors to preserve liquidity
Inventory management
Excess inventory ties up significant cash, while poor inventory planning can lead to costly stockouts. We help companies:
- Optimize inventory levels: Use advanced planning systems and demand forecasting tools to align inventory with real-time sales trends, minimizing overstock and shortages
- Reduce obsolete and slow-moving inventory: Identify underperforming stock-keeping units (SKUs), improve product rationalization and implement liquidation strategies to free up working capital
