Building a Cash-Centric Culture: The Key to Unlocking Working Capital Improvements
Improving working capital isn’t just a finance initiative – it’s a company-wide mindset shift. At its core, it’s about building a cash-centric culture, where every team understands how their decisions impact cash flow and why that matters. This isn’t about turning everyone into accountants. It’s about embedding cash awareness into everyday choices – from the shop floor to the sales pitch to the supplier negotiation.
Why Cash Awareness Matters
- Production Managers who maintain output despite weak demand may be chasing productivity metrics – but they’re also creating excess inventory that ties up cash.
- Sales Managers who offer extended payment terms to close deals might win revenue – but they also delay cash inflows and increase credit risk.
- Procurement Teams that contract with short supplier payment terms or unrealistic minimum order quantities may secure supply – but they also commit the business to early payments and bloated inventory.
These decisions aren’t wrong – they’re often made with good intentions. But without a cash-aware lens, they can quietly erode liquidity.
How to Build a Cash-Centric Culture
Creating this culture requires more than a memo from finance. It demands a deliberate, structured approach:
- Targeting and Incentives Align KPIs and reward systems with cash outcomes. If teams are measured solely on volume, margin, or speed, cash will always be secondary. Introduce metrics like Days Sales Outstanding (DSO), inventory turns, or supplier payment terms into performance dashboards.
- Communication and Training Make cash visible. Run workshops, share real examples, and explain how decisions ripple through the cash cycle. Help teams see beyond their silo and understand the broader financial ecosystem.
- Protocols for Managing Trade-Offs Not every decision will favour cash – and that’s okay. What matters is having clear protocols for evaluating trade-offs. For instance, when sales wants to offer extended terms, is there a review process? When production wants to ramp up output, is demand validated?
- Analytics and Insights Equip teams with the data they need. Dashboards that show working capital trends, cash conversion cycles, and scenario modelling can empower smarter decisions. Visibility breeds accountability.
Real-World Constraints, Real-World Awareness
Let’s be clear: prioritising cash isn’t always easy.
- A small importer sourcing from China may have no choice but to pay upfront.
- A manufacturer with rigid production lines may find it costly to slow or halt output.
These constraints are real. But they don’t diminish the ambition – they reinforce the need for awareness. Even when flexibility is limited, understanding the cash impact allows for better planning, smarter negotiation, and more informed risk-taking.
Ready to Shift the Culture?
Building a cash-centric culture isn’t a one-off project – it’s a journey. But it’s one that pays dividends in resilience, agility, and long-term value. If this resonates with you, or if you’re looking to embed cash awareness across your organisation, let’s talk. This is my day job – and I’d love to help.
Contact me to start the conversation.
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