Effective inventory management is a direct driver of cash performance, service reliability, and Profit and Loss protection. For CFOs, the objective is clear: maintain customer service levels while minimising the capital locked in stock and reducing the risk of write\u2011offs. Achieving this requires coordinated forecasting, disciplined procurement, optimised supplier terms, and strong operational controls.<\/p>\n
High\u2011performing inventory systems start with demand accuracy. For Finance, this translates into lower volatility, tighter cash forecasting, and reduced safety\u2011stock buffers.<\/p>\n
Demand planning<\/strong><\/p>\n A finance\u2011aligned planning process should ensure:<\/p>\n Material Requirements Planning (MRP)<\/strong><\/p>\n MRP effectiveness directly impacts working capital. CFO focus areas include:<\/p>\n Integrated planning reduces excess stock and improves the predictability of cash cycles.<\/p>\n Supplier payment terms<\/strong><\/p>\n Extending supplier terms is one of the most financially impactful inventory levers. CFOs should ensure:<\/p>\n Purchasing discipline<\/strong><\/p>\n Aligning purchasing timing with supplier terms (for example leveraging first\u2011of\u2011month receipts on EoM terms) can effectively add 30+ days of credit without increasing inventory risk, if done in alignment with forecasted demand.<\/p>\n Alternative stock ownership models<\/strong><\/p>\n Stock\u2011ownership structures directly reduce balance\u2011sheet inventory:<\/p>\n Both models support lower net working capital but require strong governance to avoid accounting or reconciliation issues.<\/p>\n Accounts payable excellence<\/strong><\/p>\n AP is a core component of working\u2011capital performance. CFO\u2011critical controls include:<\/p>\n Reverse factoring, and supply\u2011chain finance<\/strong><\/p>\n Reverse factoring allows suppliers early payment at low cost while the business extends its own payment terms. For CFOs, this provides:<\/p>\n Inventory losses can significantly impact EBITDA. CFOs should ensure strong discipline across:<\/p>\n Operational controls<\/strong><\/p>\n Commercial strategies<\/strong><\/p>\n For CFOs, inventory represents both a service enabler and a major consumer of cash. A coordinated approach, combining forecasting discipline, procurement strategy, supplier\u2011financing optimisation, and tight operational controls, delivers measurable improvements in working capital, service reliability, and financial resilience.<\/p>\n","protected":false},"featured_media":37169,"template":"","categories":[],"region":[240,360],"class_list":["post-37164","article","type-article","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\n\n
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Procurement and purchasing: The CFO\u2019s most powerful working\u2011capital levers<\/h3>\n
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Finance operations: Controls that protect cash and supplier relationships<\/h3>\n
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Operational and commercial controls to prevent write\u2011offs<\/h3>\n
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