Working Capital Advisory

What is working capital and why does it matter for cash flow?

Working capital represents the cash tied up in the day-to-day running of a business, including receivables, inventory and payables. How effectively it is managed has a direct and immediate impact on cash flow, liquidity and balance sheet strength.

Why do profitable businesses still experience cash flow pressure?

Profit and cash flow are not the same. Many profitable organisations have cash trapped in slow collections, excess inventory or inefficient payment practices, which can materially constrain liquidity.

How can CFOs improve cash flow without disrupting operations?

Targeted, data-driven process improvements across core working capital processes can release cash while maintaining service levels and supplier relationships. The key is focus, prioritisation and disciplined execution.

Why is working capital improvement difficult to deliver in-house?

Finance teams are often capacity-constrained and focused on ‘business as usual’ priorities. Working capital improvement requires specialist analytics, cross-functional engagement and sustained execution, which can be difficult to mobilise internally.

How quickly can working capital initiatives deliver cash benefits?

Many initiatives deliver measurable benefits within days or weeks, particularly where quick-win opportunities exist. Longer-term value is realised by embedding changes into processes, systems and behaviours.

How does KPMG’s approach differ from traditional working capital reviews?

KPMG combines advanced analytics with hands-on implementation support. We don’t just identify opportunities – we help prioritise, execute and sustain improvements. As we are helping clients implement the changes we identify, our advice is tailored, practical and focused on what really matters – achieving outcomes. 

Is working capital improvement a one-off exercise?

While immediate benefits can be realised quickly, the strongest outcomes come from embedding cash discipline into day-to-day decision-making, so improvements become sustained over time.

Have you helped clients in my industry?

Most likely, yes. We work across a wide range of industries and businesses of all shapes and sizes. Common industries include consumer products, retail/wholesale, manufacturing, services businesses, technology, and mining to name a few.

How much time does a diagnostic require?

We tailor our rapid diagnostic reviews to the specific needs of each client. Generally, a few weeks is sufficient, but we are often identifying value within days. We understand that time is important for any CFO or private equity owner and we move at speed. 

How can businesses improve cash flow while reducing supplier payment terms for small businesses?

For organisations subject to Payment Times Reporting, reducing supplier payment terms for small businesses can create additional cash flow pressure. In our experience, this can be easily offset – and often exceeded – by optimising the rest of business working capital for cash flow improvement.

By improving collections, reducing excess inventory, strengthening forecasting and embedding stronger working capital disciplines, many organisations can improve overall cash flow while meeting payment obligations and supporting small business suppliers.

KPMG helps CFOs balance compliance with Payment Times Reporting requirements while delivering sustainable cash flow improvement across the broader business.

Learn more about our Payment Times Reporting service.

Is working capital able to be automated or leverage the power of AI?

Yes. The repetitive nature of many working capital-related processes makes them ideal candidates to benefit from the power of automation and artificial intelligence. 

How does working capital improvement support private equity value creation?

Working capital improvement releases cash that can be used to reduce leverage, fund growth initiatives or support bolt-on acquisitions to directly enhance equity value. Reduction of debt levels also improves IRR and ROI returns for portfolio companies.

When should private equity investors focus on working capital in a portfolio company?

Working capital improvement is relevant across the investment lifecycle, from early-stage stabilisation through to exit preparation. Early action maximises value creation and resilience.

How can working capital improvements increase exit value?

Sustainable cash flow improvements strengthen EBITDA quality, reduce reliance on debt and demonstrate operational discipline, all of which are valued by buyers and lenders.

How do you ensure improvements are sustainable post-exit?

By embedding changes into governance, processes and behaviours, rather than relying on short-term fixes. This helps ensure cash performance is repeatable and defensible.

Can working capital initiatives be delivered without distracting management?

Yes. A structured, externally-led approach reduces the burden on management teams while accelerating outcomes, which is particularly important in sponsor-owned environments.

How quickly can private equity investors expect to see impact?

In many cases, tangible cash benefits can be realised within the first 90 days, with further value delivered over the hold period through sustained improvements.