Working capital - its impact on your credit rating?
Event type: Mastercourse
Discover how your management accounts can improve your credit rating
CIMA members and students should log in to their MY CIMA account before booking in order to receive the appropriate discount. CIPD members should please download and complete the booking form, including your membership number and email it back to us.
10 July 2014 - 09:30
Price: GBP 599.00
Member price: £539. CDS member price: £415. Plus VAT on all prices. CIPD members should please complete booking form above to book.
10 December 2014 - 09:30
Price: GBP 599.00
ember price: £539. CDS member price: £415. Plus VAT on all prices. CIPD members should please complete booking form above to book.
Who will benefit
Business and financial controllers, accountants, credit controllers and payment officers, internal auditors, accounting / IT business process owners, systems accountants, bank commercial teams, purchase teams. The course will be valuable to anyone responsible for managing any part of the working capital pipeline.
The course is aimed at all organisations that want to optimise their working capital and improve cash flow reporting; understand how working capital drivers will enhance the cash conversion cycle and ensure investors and stakeholders are viewing the right metrics.
The issues addressed by the course apply to manufacturing businesses, the services sector, logistics and retail, and to complex project / programme scenarios in the construction, engineering and oil and gas sectors, plus the consulting services to these sectors.
What you can gain
Trade working capital - asset or liability?
It seems obvious that trade debtors, stock and work in progress are assets and that trade creditors are liabilities. However a quick review of recently announced consultative documentation from bodies including the IASB, ACT, Standard and Poor and the High Court suggest that:
- trade debtors are a liability until they are fully paid
- stock not only has an overhead, freight, disposal and sometimes land fill tax cost but deteriorates in respect to its original condition and / or original premise of being an asset to be sold so could be a cash liability
- work in progress could be very subjective, particularly if a percentage of completion is involved, and could consist of unbillable or hidden costs so could cause revenues and profits to be detrimentally impacted
- trade creditors though in accounting terms recorded as a liability could be an asset.
Moreover, suppliers have invested their own cash in supporting you and they have driven costs down so that you have improved margins and in these tough debt driven times they may still be willing to adopt supply chain finance schemes like dynamic discounting.
Maybe it is about time we all looked at trade working capital in a different light?
An independent educationalist and author on working capital, John has recently written many articles for leading publications as well as facilitating and being a panellist at major events involving the Bank of England, Lloyds Banking Group, UKTI, major technology providers and VC/PE organisations. His recent work has involved ITV, DHL, Sprint Convergence, Astrium Satellites and numerous SMEs, banks, financial institutions and investment houses. John has held senior executive positions in blue chip companies such as Bombardier, Parsons, ABB, Alstom and Wimpey Taylor where he delivered worldwide programmes of strategic cash importance.
- What is working capital and why is it important to control? The lagging indicators of DSO / DPO and DIO are not fit for purpose and yet cause credit rating issues to arise.
- Is cash efficiency and effectiveness an issue and how can it be identified and reacted to in a positive and constructive manner?
- What are your peers doing and how can you address a constructive / proactive step change?
The programme will address these issues, considering:
DSO (days sales outstanding) - are your KPIs measuring the right metrics at the right time? Working capital KPIs will include those expected to be required under the Companies Act 2006 as amended in October 2013 and are a statutory requirement for accounts on or after 30 September 2013. Demand chain visibility and transparency:
- debtor differentiation - what is it, why apply it re granularity
- debtor development - proactive credit control and credit note analysis
- debtor default - strategies to identify and reduce, remove from portfolio.
DPO (days purchases outstanding) - alternative metrics including key risk indicators (KRI) . Supply chain governance and sustainability:
- certification of suppliers through portal
- categorisation of creditors re sole, dual, multi-sourcing and payment scenarios
- classification of creditors and their criticality to the business
- creation of a reverse supply chain to identify refurbishment, re-engineering opportunities.
- Purpose of holding stock - customer and supplier risk profiling as outlined under Debtors and Suppliers.
- Customer demand chain and linkages to JIT / Kanban, other methods to reduce inventory and improve cash.
- Work in progress - audit and valuation, systems billing write off, accuracy of costs.
- Monthly management reporting of working capital with action plans and timescales, by whom and how?
- Quarterly strategy review with mapping of progress, future actions to meet cash objectives.
- Cash flow graphic with introduction of full cost model and risk review report.
CIMA members and students should log in to their MY CIMA account in order to receive the appropriate discounts.
The course starts at 9.30am. Lunch and refreshments are included.
6 CPD hours (where applicable)
CIMA Mastercourses held in partnership with BPP
Find out more
If you have any queries please email or phone us on +44 (0)845 026 4722.
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