The Institute of Chartered Accountants in England and Wales (ICAEW) and HSBC are calling on businesses to prioritise work capital management as a priority for unlocking trapped cash, boosting profitability and driving sustainable growth. 

 

Work capital, the difference between a company's current assets and current liabilities, is crucial for operational efficiency and financial health. According to analysts, a staggering $44 billion of inefficiently managed working capital is currently tied up in Middle Eastern businesses. 

 

A recent event hosted by ICAEW and HSBC convened a panel of experts to address the challenges and opportunities surrounding working capital management in the region. The discussion highlighted the need for a strategic approach to optimising cash flow.

 

The panelists

•Nilesh Parekh, the Regional Head of structured Trade Finance, Asset Distribution and Sustainability, Global Trade and Receivables Finance at HSBC 

•Bruce Matthews, Partner and Head of Restructuring and Performance Improvement at KPMG Lower Gulf 

•Salmaan Khawaja, Partner and Head of Financial Advisory at Grant Thornton

 

A key takeaway from the discussion was the need for a profound cultural shift, where senior leadership champions working capital management as a strategic priority, not just an operational concern. This involves aligning working capital practices with overall business goals and developing a company-wide understanding of its impact on profitability.

 

The panel also stressed the importance of leveraging technological advancements, such as AI-powered tools for cash flow forecasting and process optimisation. However, they cautioned that technology alone is not a silver bullet - successful implementation requires strong leadership and a commitment to change.

 

Root causes of inefficiencies

The experts emphasised the importance of addressing the root causes of inefficiencies, rather than merely treating the symptoms. Whether it's inefficient cash collection processes or excessive inventory holding periods, businesses must analyse and rectify the underlying issues to achieve sustainable improvements in working capital management.

 

Finally, the panel underscored the need for tailored, region-specific solutions. While global best practices offer valuable insights, businesses in the Middle East must adapt their strategies to the unique challenges and opportunities of this dynamic and rapidly evolving market.

 

Hanadi Khalife, Head of Middle East at ICAEW, said: "Efficient work capital management is crucial in today’s volatile economic climate. By optimising cash flow, companies in the Middle East can significantly enhance their profitability and resilience. Chartered accountants play a vital role in providing the expertise needed to navigate these challenges and seize opportunities.”--TradeArabia News Service