Why Nordic companies struggle with working capital management
During the spring reLean has conducted a survey of working capital performance across western Europe which led to several interesting conclusions. One of the most interesting findings was that Nordic companies in later years are struggling in keeping up with their European peers.
The survey was conducted across all industries and shows that only one in three Nordic companies are currently outperforming their peers, with inventory and accounts payables as specifically problematic areas. During our discussions on the topic on seminars and in our meetings with clients, the picture is confirmed by both CFOs and COOs across the Nordics.
Five main reasons that hinder performance
But why are so many companies falling behind in this area? The survey shows that there is less maturity in Nordic companies when it comes to managing working capital in a more professional way. Our interviews across company functions indicate that there are five main areas where the answers may be found.
The words of one of the interviewed CFOs sums up how these different issues sometimes interact to create a culture of bad habits inside a company:
”Since there is no management focus on the balance sheet, performance is not measured; sales reps focus on maximizing deals, not receiving payment”
On the other hand, successful companies have found ways of navigating the issues above by adopting a more balanced approach in how to measure and manage the overall company performance with good cash management measures and practices. High performing companies also avoid potential trade-offs by thoroughly understanding their processes and making fact-based decisions on how to improve them.
Interested in learning more about the reLean working capital survey or how your company is performing against your industry benchmark? Reach out to any of our working capital experts in Stockholm or London.
Stockholm office contact
+46 (0)708 756 111
London office contact
+44 (0)7944 071 691