Last year, 1,000 of the biggest U.S. companies freed up about $72 billion through improvements in collecting bills, turning over inventory and stretching out the amount of time they take to pay their own suppliers, according to a survey by Hackett-REL, a unit of business-consulting firm Hackett Group that focuses on working-capital issues.
These companies reduced the amount of money they have tied up in working capital by an average 5.6% from 2004, according to the survey. Of the 82 industries surveyed, 45 improved their working-capital situation, while 35 worsened and the rest were unchanged from a similar survey in 2004.
U.S. companies are reaping the
benefit of increased investment in software that helps manage their cash
and treasury operations
Among sectors that registered the biggest improvement: cable broadcasters, which saw working-capital needs decline 46%; big oil companies, which posted a 45% drop; and marine-transportation companies, which had a 30% fall.
Reducing working-capital needs can lead to significant improvements in a company's overall cash flow. At machinery producer Caterpillar Inc., an 8% reduction in working-capital needs freed up about $2.4 billion in cash last year.