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Who typically leads working capital initiatives in larger companies? Accounting,Treasury, or individual departments (AR, AP, inventory replinishment)?

I'll define "larger" as being over $500 million in revenue. So who leads and coordinates goals in working capital?: 1. The controller/accounting area; or 2. Treasury/Finance area managers; or 3. Individual departments like AR and AP responsible with direction from the CFO? 4. other Thanks


Topic Expert
David OBrien
Title: Treasury Consultant
Company: EE Treasury
(Treasury Consultant, EE Treasury) |

Dear Anonymous:

In regards to the management of working capital Best Practice is that one area should be responsible for COORDINATING the management of working capital across the complex. You continue to have specific departments as the subject Matter Experts responsible for Inventory, Receivables, Payables is critical to have one dfepartment responsible for coordinating the target setting, reporting and tracking.

As far as where that role should be housed: during myt 30 year career I have known some companies to establish a VP or Working Capitalmy 30 year, I have known several companies to give the role to the Controller for myself I have been asked to perform the role for 3 large companies as an expanded Treasury mandate (Treasury global in scope, across all lines of business, working capital linkage to cash management and forecsting.

Good luck

Marcel Wiedenbrugge
Title: director
Company: WCMConsult
LinkedIn Profile
(director, WCMConsult) |

My two cents. Working Capital (WC) management i.e. WC initiatives should be initiated by top management i.e. the CFO. However, in order to make WC initiatives effective a CFO needs well instructed operational teams to turn WC initiatives into long term results. Good working capital management benefits the continuity of a company as a whole and as such the CFO has the responsibility to explain the necessity of WC management; not only to AR, AP and supply chain / logistics, but also to manufacturing, sales, marketing and customer service.

Clarity G
Title: Fin/Management Accountant
Company: Australian Government
LinkedIn Profile
(Fin/Management Accountant, Australian Government) |

My view is similar to David and Marcel. It depends on the company structure and how other areas that contribute to working capital (AR, AP, Treasury and sometimes outsourced sections of General Ledger/accounting) are managed.However if I were to pick the specific query, initiative is from Treasury as they require information to manage funds - ensuring availability of funds for AP, and investing surplus funds into 11 am account. Providing the analysis of working capital is the responsibility of Finance area managers. The analysis is dependent on the reconciliation of bank accounts, funds requirements for invoices payments (AP) and what would be collected from Receivables. In a nutshell, AR, AP and Banking area contribute their daily status towards the analysis of working capital requirements that is managed by Finance managers.While treasury's goal is to make funds available and treasury takes the initiative, it is ulitmate responsibility of the Finance manager or Finance Controller.


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