The New Working Capital Paradigm: Unified Strategies for the Post-Pandemic Era

Kent Edgerton, Managing Director Brett Everhart, Managing Director Richard Jenkins, Managing Director Christopher Kulp, Managing Director Allison Earnest, Senior Director

Transform Your Working Capital Management for the Post-Pandemic Era

The global supply chain experienced unprecedented complexity during the COVID-19 pandemic, exposing instability — with the biggest impact on cash flow and working capital requirements — and its inconsistency in supply bases during a time of increasing demand. Although recovery has started, many companies are still struggling to return to pre-pandemic working capital levels, even as stability improves and inventory levels decrease.

As businesses strive to recover and stabilize, optimizing working capital remains crucial. Our comprehensive guide explores three critical actions companies can take to reduce inventory value and improve cash flow, ensuring long-term financial health.

What Effect Did the Pandemic Have on Working Capital?

During the pandemic, many companies increased their order quantities to manage supply and demand variability, leading to a heavy reliance on working capital to mitigate shortages and maintain operations. This resulted in tighter cash flow, longer accounts receivable timelines and increased excess and obsolete inventory as demand normalized post-pandemic. Despite the reduction in supply chain instability and excess inventory levels, companies continue to struggle with elevated working capital requirements due to inflationary pressures and the need to reinstitute optimal practices. Achieving pre-pandemic working capital efficiency will necessitate a comprehensive approach involving cross-functional collaboration across sales, operations, procurement and finance to address excess inventory, cost increases and ongoing inflationary impacts.

Key Strategies for Optimizing Working Capital:

Enhance sales and inventory strategies and operations planning
Improve procurement efficiency
Streamline order-to-cash and procure-to-pay processes

By leveraging lessons learned during the pandemic and implementing strategic approaches to inventory management, procurement and process improvements, companies can achieve pre-pandemic levels of working capital efficiency.

Ready to transform your working capital management? Download our comprehensive guide and discover actionable strategies to optimize your working capital, improve cash flow and drive sustainable growth.

Download the Full Report

Authors

Kent Edgerton

Managing Director

Kent Edgerton is a Managing Director with the Alvarez & Marsal Private Equity Services Operations Group in Nashville. He specializes in supply chain management and operational improvement and has worked with clients in manufacturing, distribution, transportation, medical devices, retail, wholesale, telecommunications and chemicals.

Brett Everhart

Managing Director

Brett Everhart is a Managing Director with Alvarez & Marsal Private Equity Performance Improvement in Miami. He leads the firm’s CFO Services' Working Capital and Cash Improvement offering.

Richard Jenkins

Managing Director

Richard Jenkins is a Managing Director for the Private Equity Services group of Alvarez & Marsal. He focuses on developing and implementing performance improvement initiatives and performing C-level management for Private Equity (“PE”) owned companies.

Christopher Kulp

Managing Director

Christopher Kulp is a Managing Director with Alvarez & Marsal Private Equity Services Operations Group in New York. He leads the Procurement and Sourcing group.

Allison Earnest

Senior Director

Allison Earnest is a Senior Director with Alvarez & Marsal's Private Equity Performance Improvement group in Denver. Ms. Earnest brings more than 15 years of experience in strategic sourcing engagement and transformation projects, handling $10+ billion in spend and implementing sustainable process and organizational improvements for Fortune 50 and 500 companies, as well as private equity clients.