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Is your company short of liquidity because of the economic crisis? In a survey conducted over the summer of 2009, the Danske Bank Group has examined how companies can use working capital management to free liquidity for day-to-day operations. The survey is based partly on the knowledge the Group uses when providing cash management services to customers across northern Europe.

An opportunity to free liquidity
Working capital is an area in which companies can navigate to free liquidity by reducing the funds tied up in stocks or customer credits. The Danske Bank Group estimates that companies can free between five and ten per cent of the turnover that is used for working capital.

The challenges of 160 northern European companies
The working capital survey was conducted in cooperation with Ernst & Young and focuses on how 160 of the largest companies in Finland, Sweden, Norway and Denmark strive to optimise working capital management. The survey identifies the challenges these companies face and the opportunities for improvement.

The gains are substantial – and have a direct impact on the bottom line – if a company makes a targeted effort to minimise the capital tied up in various areas of the company. This is the reason why a third of the companies that participated in the survey include working capital on the list of formulated targets and financial strategies.

Initiatives to improve cash flows
During the economic crisis, many companies have seen sales fall in the course of a short time. As adjustments of production capacity and volume take time, stocks have increased and so have the funds tied up in stocks. In the short term, companies therefore face the challenge of raising the necessary liquidity. Consequently, the focus is now on internal efficiency and process management rather than growth.



More than half of the companies that participated in the survey stated that they see the largest potential within the optimisation of internal processes and the tightening of existing processes and procedures. Also the terms of payment and the credit periods offered by suppliers and to customers are important parameters for companies wanting to optimise the efficiency of internal processes.

High-quality consultancy services
You can download the full survey on this page and use it to compare your company’s approach to working capital management to that of other companies. Danske Bank offers high-quality working capital management advice. Contact us to find out more about our services.

Published on July 17, 2009.

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