Speed still matters. Improving capital efficiency literally pays off.
Last week we shared our thoughts about the financial impact poor payment management has on owners and contractors alike.
This week we would like to talk about a recent study: “PwC’s Annual global Working Capital Study”, which also supports that poor cash flow management impacts companies from all industries, globally. It’s time to acknowledge this happens to all companies managing high budget programs and how simple actions can change their performance within months.
e-Builder client Memorial Hermann, one of the largest not-for-profit health systems in the nation, is not a stranger to this issue.
- Few projects were coming in on-time and on-budget. One budget on a $66 million project was exceeded by over $4 million due to lack of visibility of issues
- Proposed projects included a contingency budget to account for potential issues that might arise, reducing the available funds for other projects
- More than 400 invoices were being processed per month, with up to 31% being paid late due to a cumbersome and lengthy routing process
The solution is simpler than it sounds: Single data entry with automated workflows enabled more efficient processes and reports, as well as minimizing risks associated with human errors in manual inputs. Improved tracking and reporting capabilities allowed for $700,000 of savings to be re-deployed to another project.
If all the companies in PwC’s study were to improve their working capital efficiency as seen with Memorial Hermann, this could potentially represent a cash release of USD $1.45tr. This would be enough for global companies to boost their capital investment by 55% – without needing to access additional funding or put their cash flows under pressure.
Can you envision a 55% boost to your capital improvement effectiveness?
Join us on November 20, at 2pm EST, in for a lively conversation with e-Builder clients and learn how they have actively changed their payment cycle, thus allocating money to other projects and programs.