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Manufacturers could be without the benefit of opportunity to unlock cash Magazine

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Manufacturers may be losing out on the chance unlock cash from other business due to untapped cash release opportunities, warns audit, tax and consulting firm RSM.

Improving capital practices throughout the uk manufacturing sector could have a cash injection all the way to 6% of turnover, based on the latest RSM capital survey. To the sample data used, this means circa 400m, highlighting a large chance of UK manufacturers.

Introducing key improvements to lower working capital through new or modified processes and compliance will generate cost benefits, particularly transactional and operational.

The survey analysed a variety of capital metrics from 75 UK-based companies and reaffirmed previous findings that inventory is extremely important driver of capital. Additionally, the sales and purchases data mirrored last year’s figures signifying that there continues to be no change as well as the sector is constantly on the miss cash release opportunities through embedding working capital management.

Improving capital practices isn’t going to only provide valuable cash for investments but it surely will usually increase customer care with better on-time, fully performance and improving staff morale as they are able to waste shorter time on reactive fire-fighting.

Paul Underwood, pictured, consulting director at RSM, said: “The manufacturing sector continues to face a number of challenges and accessing cash to purchase technologies, skilled workers, energy reduction or international growth plans could transform a company, but unlocking capital crucial to this particular investment.

“Although banks are becoming keener to lend, manufacturers could consider looking far better home and consider the best way to access much-needed cash using their company own resources. The findings reveal that optimising capital management across our sample could deliver a cash launch of as much as 400m. However, this is merely the end of the iceberg and the potential for the wider manufacturing sector is a lot greater.

“Investments inside right areas can bring about a boost in productivity, improved consistency in quality and support further penetration?in local, national and international markets, so a cash injection of as much as 6% of turnover is usually a significant boost to assist future growth for that UK’s manufacturing sector.”

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