The importance of working capital as a business performance indicator was highlighted in a recent poll of 134 European company finance professionals, conducted online on behalf of ABN Amro and KPMG.
When asked the most effective means of incentivising management, respondents tended to agree that profit, cash generation and working capital management were the most effective means of incentivising management to meet targets.
CFOs accounted for 32% of total respondents. Companies also see the principal driver for having an active working capital programme as stakeholder demands from boards, shareholders and analysts for more cash data (as opposed to profit and loss information).
Commenting on the results, Ann Cairns, managing director of working capital at ABN Amro says: "This re-inforces what we hear on a day-to-day basis from our clients.Companaies without the tools and disciplines to measure and manage day-to-day working capital will be disadvantaged."