The global demand for latex and nitrile gloves will continue...
The header itself can induce Melatonin, a chemical in our system responsible to make us feel sleepy. Yes, the topic can be quite dry, but what if we tell you that paying close attention to it can unleash 71 billion ringgit worth of trapped cash?
According to a study conducted in 2017 by PricewaterhouseCoopers, up to 71 billion Ringgit worth of “trapped cash” can be unleashed from 367 publicly listed Malaysian companies if they make improvements to their working capital cycle.
Despite the sampled population, this scenario is not exclusive to big public listed companies. In fact, the study found out that bigger companies manage their working capital a lot better than smaller ones, hence, smaller public listed companies and SMEs will likely be worst off in terms of the amount of cash that are inadvertently locked.
An updated report from the same big-4 outfit in 2020 below indicates that delays in the collection have gotten worst which is no surprise considering the economic climate that everyone is in today.
Working Capital Cycle is predominantly these three components:
If you look at the chart below, the key to unlocking that trapped cash lies entirely with the DSO and to some extend – the DIO.
According to this excellent article from PwC, the remedies are 3 fold
Processes and culture, especially the latter, can take a lot of time to plan, implement and cultivate. They deserve a fully separate section and discussion on their respective roles to unleash your trapped cash.
Technology, on the other hand, is not only the most tangible of the three but also the quickest to implement. By and large, it also automatically deal with sets of new, enhanced or improved processes during its implementation.
A dedicated software application for accounts receivable professionals is largely ignored by giant software providers locally and overseas. There are only a handful of international players and only one serious player locally.
The reason lies in the fact that every ERP and accounting software would already have a comprehensive general ledger and invoicing module, which are used in combination with disparate email, sticky-note, Excel, and CRM systems by every collection departments throughout the country.
An investment into Accounts Receivable Solution on the cloud will not only eliminate a tonne of inefficiency but it will ultimately help you COLLECT MORE DEBT in LESS TIME while incurring LESS COST