Challenges of Working Capital Management

Announcer  00:04

Welcome to the Treasury Update Podcast presented by Strategic Treasure, your source for interesting treasury news, analysis, and insights in your car, at the gym, or wherever you decide to tune it. Liquidity matters.  Simply being profitable is not enough. Maintaining cash that’s needed for daily operations can be an interesting challenge. Today, we’ll hear from Brent Kinman of Corcentric as he shares stories of companies who attempted to optimize their working capital, followed by some unintended results.

 

Craig Jeffery  00:41

Welcome to the podcast. I’m here with Brent Kinman. Brent, it’s good to have you on the Treasury Update Podcast.

 

Brent Kinman  00:48

Yeah, thank you very much, Craig, for having me. Delighted to be here.

 

Craig Jeffery  00:51

I wanted to begin with a definition of working capital and maybe not a definition, but maybe your explanation of working capital. So what do you mean by working capital when you’re talking with your clients?

 

Brent Kinman  01:05

In most simplistic terms, it’s just the cash that you have on hand that is used in day to day operations of your business, whether that’s doing payroll or paying your AP bills, or anything for emergencies? Again, it’s just the cash you have in a bank account to keep the lights on and keep operating.

 

Craig Jeffery  01:24

Does that include receivables? Or only when that converts to cash? How about payables or inventories?  Inventory, part of the definition of working capital that you’re talking about? Or is it more, hey, here’s the liquidity, I have to do those things.

 

Brent Kinman  01:38

It’s mainly around the liquidity that you have to do these things as a practical definition for for those that are not treasury or finance oriented. And it’ll manifest itself in something called a cash conversion cycle, which is your inventory plus your day sales outstanding, minus your days payable outstanding. That cash conversion cycle, as I’m sure we’re going to get into, it really reflects the health of the business in terms of converting its inventory into real cash.

 

Craig Jeffery  02:11

Okay, great. Yeah. Glad you brought up the cash conversion cycle.  That measure of efficiency, like you said, of converting, putting cash into the business converting it out. That’s, that’s excellent. But when we talk about optimizing working capital, or managing working capital, what are some of the core challenges, or what is the core challenge with this business of optimizing working capital? What what do, you how do you describe that to your customers? Or how do you talk about that?

 

Brent Kinman  02:39

I’ll try and manifest the end point with an observation that I’ve made over the past 22 years, and it’s and it’s really this.  Not yet have I ever met anyone in corporate life whose title is head of working capital, or free cash flow optimizer, or, or anything of the kind.  And so the challenge is, is that it’s not a centralized function. And to optimize it requires the cooperation and shared responsibility across procurement, AP, AR, finance, and operations.  It’s really many hands make light work in this optimization.  Yet few, and in fact, none really, that I’ve ever seen organically rise up and manage this holistically, without engaging outside help, and without a dedicated initiative to improve it.

 

Craig Jeffery  03:34

I like that description. I also like your term about chief of working capital, or person in charge head of working capital, I think you might have said, that’s a good description. Now, you talked about free cash flow. I thought you were going to quote from Stern Stewart, the Economic Value Added book, maybe that’s coming.  You know, when we when you look at that, that the chief of working capital, who should be managing working capital, is it just this collective of people doing it, you know, altogether? Or is by you’re saying it that way that there is a, there tends to be a lack of focus in an organization on this, and that should be adjusted?

 

Brent Kinman  04:13

Yeah, absolutely. In almost every successful case that I’ve seen in an industry of companies optimizing their cash flows, and we’re in working capital, most of the time, it’s led out of treasury at the behest of the CFO, many, many times. It is that coordinating and centralized function that seeks to aligned the cash that’s effectively seized up in inventory, receivables and payables. And then there are dedicated programs which each one of those items those those variables of the cash conversion cycle that that gets ironed out and and cash gets if you will effectively put on the balance sheet by either lengthening one’s days payable outstanding, reducing one’s inventory, or shortening the time of collection of payment from from customers.

 

Craig Jeffery  05:04

You know, from a challenge perspective, there can be different areas of focus that company has. There’s competing elements, whether it’s the revenue, the assets, the income statement, the balance sheet. Maybe you could comment on that too. What are you? What are you seeing there in terms of most companies focusing on different elements and is working capital taking a backseat?

 

Brent Kinman  05:30

It totally is, I would say as a general comment that there is an income statement bias in the way as such that people get compensated and are incentivized within one’s Corporation. The sales force, let us say, right, is driven by by bookings and revenue, which are income statement, notions, procurement and AP, are largely on cost reductions, I’ve just noticed intuitively, people can get the notion much more easily of, you know, buy low, sell high. In many people’s minds, cash flow, and working capital are somewhat abstractions to the mind. But mind you that my favorite quote about cash is from Warren Buffett, I’m gonna highly summarize it. He says that cash is to a business as oxygen is to a human being.  Rarely thought about when present, but all you can think about when not.  Part of the issue in optimizing working capital is that the metric doesn’t inspire. And so you have to really do two things, in my opinion, to get the function rolling towards optimization. Number one is it has to be in people’s incentives, plans and compensation structures, because otherwise, they’re going to be incented for something else, maybe to the detriment of working capital. As a best practice, the organization has to do a good job of connecting what that cash flow and working capital optimization will do in terms of tangible business outcomes. And so the most successful programs in this area that I’ve ever seen, don’t just put out a metric for achievement, hey, we’re going to lower our cash conversion cycle by 10 days, or we’re going to put, you know $100 million onto the balance sheet. Most oftentimes, it is associated with a tangible business outcome, whether it’s maintaining or increasing the dividend. Whether it’s entering a new market or a new product or or entering a new geography, something that people tangibly can see as to why they’re attempting to optimize one of those three variables inventory, receivables or payables. why they’re doing it, I think makes as much difference as compensating them to do it in the first place.

 

Craig Jeffery  07:50

I would have to concur with a lot of the stories and measurements that we see coming out of companies, there is a there is a stronger bias in most companies on income statement, but you can’t just focus on one, which is I think part of the story. I like your point about metrics don’t inspire by themselves into something tangible with that when we did a prep for this discussion, you shared a lot of stories and gave some examples. And I thought they were great. I, I would really like to learn from you on that by talking about some of these stories or using stories as a way to convey that. Maybe the broader question is how can process success lead to unexpected or unintended results? I think sometimes we learned from the negative story you mentioned, they’re tied together maybe at the top of the house, as opposed to optimizing something below. And you can take stories in different ways. But maybe we could start with some of the different areas because you cover a lot of these areas. And if I surprise you with an example or an area, don’t worry, I’ll I’ll provide one if you don’t have it, but maybe we can begin with purchasing. I’m pretty sure you shared an example about purchasing or at least talked about that the other day and didn’t know if you had one that would we can learn how some measure of success in purchasing can lead to the detriment of working capital. Therefore we can all learn from that.

 

Brent Kinman  09:16

When we talk about purchasing. Let’s talk about how in general when I’m involved with a corporation, things work in homeostasis or the status quo. Back to that incentive metric, right purchasing is oftentimes incented on cost savings, either piece rate or even total cost of ownership. But curiously enough, the total cost of ownership, either the equations or the the formulas that they use, don’t include the time value of money and terms of payment term.

 

Craig Jeffery  09:47

They ignore it, yeah.

 

Brent Kinman  09:48

It’s totally ignored. You know, I will pay you $1 in 30 days or $1.05 and 90. Procurement has almost in many cases, not a point of view and So they will vote with their with their compensation plan in their wallet to go what maximizes the benefit of their particular function. But you know, back to these stories, I actually do believe that most working capital programs that the modern ones come in the form of the business, and namely the CFO and the CEO, working with the board of directors, and you know, some initiative or business outcome gets decided at that level. And then the CEO and the CFO come back to the C suite and say, Hey, we want to do this. So an example of a consumer products company in the food space needed to do a total rebranding, if you recall, maybe 10, 15 years ago, gluten free, just the secular trends in that industry, were causing them to have to provide non GMO foods. And there was this move towards health and wellness and all of their products were kind of stuck in the in the 19th century conviction. And so they had to run a project to totally overhaul their marketing and their product mix and the ingredients even that they put in their food, it was going to cost them a billion dollars. And so they started to look, I’m sure I wasn’t there for the conversation, but like, Hey, how are we going to pay for this transformation? And luckily, they had consultants who said, Well, hey, we’ve got 580 million making that up, but some material portion of this project is stuck and seized in our inefficient operations. And oh, yeah, do you happen to know that compared to our competitors, we’re paying our suppliers on average, 37 days faster than the competition. And so it was that realization, a business outcome that they wanted to achieve. And then a strategy of working capital optimization on the payables end started to emerge, I want to be completely delicate in the fact that their actions to get fair market terms with their suppliers was not predatory. Again, we tend to think again, and this notion of a price income statement, I can promise you, every professional procurement department in the Fortune 2000, if they discover that their competitor’s getting a better price, I promise you that day, right? They are calling up and getting that price, but why not with term really the same notion? And yes, there’s Oh, well, different specs, and, and this and that they have at the end of the day term is a real economic value lever. And so systematically, they benchmark all of their terms with their suppliers, and then funded or initiated several different payables programs to increase their days payable outstanding. It’s just that simple. And they used anything from dynamic discounting, early payment discounts, to fund some of the program, they had supply chain finance was another traditional mechanism by which many times when a buyer has a lower cost of capital than a supplier there, you can get a bank to step in between the two and pay one early, and then the bank gets paid back later. And oftentimes, we call that rate arbitrage, right, where both parties are actually better off in that scenario, they used virtual cards. And then as all of that kind of one time push was going on, they instituted policies and procedures, so that they trained procurement on the time value of money in the payment term sense, and gave them tools and techniques that upon the negotiation battlefield, if you will, right, they could make a fair economic determination as to what the best total cost of both price and term meant, and ultimately funded the majority of this billion dollar program, simply grabbing it, if you will, out of their out of their payables.

 

Craig Jeffery  13:56

There wasn’t predatory, and they were moving them to regular terms. You know, there’s this not accounting for the time value of money and and the overall market. I think there’s another aspect of that, too, is if you’re paying, you know, sooner or you’re, let’s say you’re collecting, maybe less on the purchasing side, but if you’re collecting a lot slower, you also have a greater risk there. If we look at the receivable side, or the sales side, what, you know, letting people pay later has a time value of money. But there’s also a greater likelihood of more on collectability, which we don’t normally think about there. So that’s a great story. On the purchasing side, do you have any stories on the sales side?

 

Brent Kinman  14:39

In terms of receivables, it’s a beautiful example of the interconnectedness of departments when it comes to working capital. When we here at Corcentric are talking to you know, a customer or potential customer of ours, we want to talk to their sales force, because ultimately on the other side of procurement with payables, right there is a salesperson, who is also offering some payment term and the facilitation of a transaction.  Getting into one’s CRM system and setting policies as to what sales can do and not can, at least at the very front end of the process, preserve one’s day sales outstanding, just by virtue of now making salespeople think about it. And thinking about that order to cash cycle, not just about closing the transaction at hand. I’ve seen a lot of innovation beyond just traditional factoring in the receivables market. Some very interesting, large technology players that run some of the larger business commerce networks that are out there have incredible insights into facts and data for financial institutions and fintechs that want to fund these receivables, which is to say, pay the supplier early and then collect the payment from the buyer at a later date and then charge some sort of financing fee to the supplier. These large business networks with appropriate permissions, right, with data security and privacy are peeking into the commerce networks and empirically seeing how that supplier is performing. We are literally in round one of this on the innovation scale. Because traditionally, a supplier who wants to finance their receivables basically has to give the financier a data dump and you know, is it accurate? You know, are they, the data is stale, financiers would rather peer in and see what’s going on, verify who their customers are, see the behavior of what’s actually going on. And at least my personal witness to this is that receivables finance could be quite high, we’re talking depending on the financial quality of that supplier, you know, even 15, 16, 17% APRs that suppliers were were getting to sell their receivables. These commerce networks have provided data and information to the financiers that has driven that down. I’ve seen it as low as 8, 9, 10% APR, which again, in the span of 5 years, irrespective of interest rates and global economic factors, just that visibility has done a good service, if you will, to the invisible hand of capitalism, allocating precious resources, you know, where where they can be most efficiently utilized. But again, just like on the payable side, the connection between the receivables organization AR, the sales force and the order to cash organization, having a goal in mind and what this will mean, not just in terms of the metrics, but what the business can can do with the cash makes all the difference in the world and making these programs work.

 

Craig Jeffery  17:50

You know, Brent, some of the improvements that happen on the the efficiency side of making the cash conversion cycle run more rapidly. Sometimes that creates unintended results. I know you had shared some examples there. You know, I want to get to the to tap into the strategies and tactics that you often use to help companies do better with their working capital liquidity optimize it, typically reducing some of these inefficiencies are trapping cash that doesn’t need to be stuck there. Whether you go back to examples, like we’re stepping through purchasing and sales and AR, it may be something with AP and treasury, but I think you have you can talk about how those changes have occurred and how changes may have unintended consequences, but changes can also precipitate other changes. You know, no one one was on the AP side that you had. And I think that’s really instructive to us just to think about how we how we act.

 

Brent Kinman  18:53

Yeah, there’s a certain irony to this story that I think will illustrate the point. Let’s strictly talk payables for a moment, if your AP process is not in order, let us say which I define as being able to pay a any given supplier on the day of your choosing, right a working capital program that incents suppliers to take early payments or accept Supply Chain Finance or early payment discounts all those things that are tools of the trade to help one drive their days payable outstanding to something that is more market competitive, right if you can’t do that if the underlying technology and process isn’t efficient enough then a working capital program on the payables side is not for you. It’s just not.  This brings to mind a story of a company who we talked with about this and they agreed with us that that was going to be the first step they actually had a decent days payable outstanding, but not for the reasons that you would think the reason that they were doing okay in that area is because it simply took them that long to process an invoice and actually pay it which was rarely on time. And one of their unintended consequences early on is doing a technology implementation project to get AP workflow automated and captured digitally and all those great things. They went head with that project with the company that I was with. And it was great, with the exception of it caught Treasury off guard, because now invoices could be paid on time. So there was a mad scramble of basically trying to bolster the cash position and stabilize it as a effectively the prerequisite technology that they needed to improve overall went in, it actually had the reverse effect, they were simply now able to honor the terms that they had in place. So these things again need to be I call them the Three Amigos sometimes in jest, I get snickers when I hear that, but the three amigos are treasury, AP, and this is payables focused, and procurement. And without the alignment, and if you will, even a council the working capital council, on the payables in that those are the three and they have to a have their scorecards aligned, especially at the leadership level. But even on the brass tacks of we’re now going to entice suppliers into an early payment program. Right? If that’s not done in concert with Treasury, 10, 15 years ago, we’ve run some companies, you know, out of some cash and instituting what is a good thing, but kind of in isolation of one or the other functions. So.

 

Craig Jeffery  21:37

Brent is an example of you know, the cycle time to get an invoice in, approved, and ready to payment dropped down, let’s say dramatically, just became far more efficient. They’re paying earlier because our process was so slow, we pay it when it gets approved, and that’s always late. And so that’s just the next event. And now it got it, sped up. Now they’re paying when it’s approved. But you’ve knocked off a bunch of days now you’re paying early.

 

Brent Kinman  22:06

Yeah, in this particular case, I’ll just I’ll use some hypothetical numbers, their days payable outstanding was about 37 days, because it literally took them 36 days to approve an invoice and put it in for payment. And you know, the supplier would get paid overnight.  When they implemented an AP workflow tool and optimized their processes, digitized the capture of those invoices on the way through the door, now they were getting invoices approved in five days and systematically, they could pay on the 30th day like they were supposed to.  That was the unintended consequence of improving the function from a piece perspective. But yet Treasury really not grasping, you know that they were going to accelerate on average every payment seven days, because now they could

 

Craig Jeffery  22:56

The improving the efficiency on the payable side, procure all the way through payment, there was that perhaps a, the mechanism of releasing payment when it was due was was one aspect of that. Anything, anything else in there that that we should think about?

 

Brent Kinman  23:15

Again, just focusing in on payables for a moment, on an operational level, beyond the hey, let’s tie this to a business outcome and not just a metric, you know, let’s drive incentive plans across procurement, AP and Treasury. So that everybody’s aligned harmoniously across the various functions. When you get into the implementation of these kinds of programs. A lot of it has to do with supplier trust.  From my comment earlier, if you want to optimize your days payable outstanding, you’re probably going to use virtual cards or dynamic discounting or supply chain finance. But the supplier has to trust you that you will pay them on the day that you say you’re going to pay them because oftentimes this is a value exchange.  Let’s just take the early payment discount scenario where maybe you have a supplier you know, that’s on a net 30 term. Oftentimes what corporates will do is say, look, I want to change your net term to 45 days. But in exchange for that, I’ll give you the ability to accelerate your payment even down to like five days. So there’s this value exchange, hey, I’m going to give you flexibility I’m gonna give you basically, you know, a friction free way to accelerate your receivables for a supplier, but the supplier has to trust you. They there’s this this trust equation between AP and AR. I’ve seen a lot of programs go wrong when the promise is not delivered from AP. In other words, the supplier selects a discount to be paid 25 days earlier, and yet they’re paid at the net term minus the discount. So that’s, that’s why you must have again on the payables and you must have one ship in order to make these programs work, because again, at the operational level, it requires trust,

 

Craig Jeffery  25:12

That’d be a little hard to accept, right, I’ve basically I’ve offered a lower price them without the increased level of flexibility for when I collect my cash.

 

Brent Kinman  25:22

I don’t see it as much these days, but you would be aghast 15 years ago, some of the horror stories of suppliers offering early payment discounts or trying to take Supply Chain Finance, and ultimately giving up the the discount and still being paid at net or accepting a virtual card. And the same thing, those programs don’t go very far.

 

Craig Jeffery  25:48

I want to hear another story that highlights some of the tactics or strategies that you use. But we have a lot of treasures in our audience, maybe you could share anything, that you see what makes a successful or great treasurer in the realm of working capital management versus what might be an indication of, maybe they’re not, they’re not going to be a great working capital management treasurer.

 

Brent Kinman  26:17

My view of treasurer’s is there are two types.  Sorry treasurer’s out there. Maybe there are more, the ones that have CFO aspirations and those that don’t, neither is right or wrong. Ultimately, I believe a successful working capital program is going to require a treasury to get out there in the business, and mix it up with other leaders of the business and ultimately drive the C suite, which is tough, right? This is managing up. Like I mentioned before, corporate decisioning is quite uniform and how big decisions get made. Most of the time, it’s the CFO and the CEO, deciding what they’re going to do with the board, then they come back to the C suite. And they say, Okay, we need strategies to do this. It’s at that point where the treasurer if they know that there’s a lot of cash seized up in payables and receivables, could offer up a working capital program as yet a strategy in the organization that can help the board and the CEO manifest one of these outcomes, that’s the best way to do it. The other style of treasurer will just use the metric, hey, let’s put $200 million on our balance sheet, you know, etc, etc, that I’ve just never found that metrics driven motivation to inspire the kind of cooperation is going to need to pull one of these things off. Otherwise, you know, go get an ABL or some other source of financing, you know, to create a new product line or anything else, it is money that is available to the firm. As long as you’re not being predatory in the market, I want to stress that.  You should pay your suppliers when everybody else does. And you should pretty much aspire to collect your money when all your peers do. I don’t know if you’ve noticed in food and beverage, their average days payable outstanding was probably 60 days in 2012. It’s now past 120. They have gone so far out there that it’s given, you know, this kind of optimization, even maybe a little bit of a black eye, sorry, food and beverage out there. And if you’re behind the market and catching up, being able to demonstrate as a treasurer, that you can coordinate, drive consensus and agreement across multiple functions at the same time, is oftentimes a feather in one’s cap to you know, taking that next step as a CFO.

 

Craig Jeffery  28:44

Remember, the wimpy burger, I’ll gladly pay you Tuesday for a hamburger today, I think in the food and beverage, you’re saying, I will gladly pay you in August for a drink today. That’s a pretty interesting number there. And, and then your point about you know, if you’re looking at a process, I’m always I say this quote too much. So sorry for those who regularly listen to the podcast. If you optimize part of the process, you sub optimize the whole.  To fix the process, you have to look at it from an end to end basis. And that’s what you’re saying is there’s one type of treasurer who says, We have to look at this from a cross functional perspective. And the other one that says hey, I’m just gonna put out some numbers and hope people get to it or I’ll only work on optimizing things within my direct sphere of influence, because I can only influence others not command.

 

Brent Kinman  29:33

Absolutely.  More brilliantly architected and articulated then then I put it. Yes.

 

Craig Jeffery  29:42

I don’t know about that. But, but I do want to hear another story. I don’t know if you have another one in the hopper about. Yeah, different strategies or tactics that companies have used to optimize things, including where they, you know, there’s always this adjustment when you make those adjustments. There’s other learning that takes place and it takes a, you know, iteration or two, just like learning to ride a bike to get that smooth flow and realize that, do you have a final great story for us?

 

Brent Kinman  30:10

Yeah, sure, probably the most spectacular use. And I hope many of your listeners are familiar with some of these AP products that are offered in the marketplace. This is a spectacular use of Supply Chain Finance, in the food and beverage industry again, by the way, I gotta I gotta give a shout out in the in the beverage industry, I believe that this push on payables began with the beer manufacturers, if you can hear their story about from the moment that you know, they begin making the product until when it absolutely gets sold it, it’s a tough business, they, they they have horrible Cash Conversion cycles, this player in the industry wanted to make a spectacular acquisition, and they just were not in the financial shape, their balance sheet was going to cause all sorts of problems in acquiring their target. And so that, you know, they sat down with their supply base and said, Look, this is actually better for you too.  What we want to do, right, we want to push our payables out, we’re gonna get you early funding through a bank. But ultimately, if we are able to convert on this strategy, the ultimate end of it is that we’re going to be able to buy more from you. So they engage one of the prominent fintechs out there, I won’t mention him by name, but they’re in the supply chain finance space. And ultimately, wherever they drive their payables to the tune of several 100 million dollars of cash that quickly got onto the balance sheet we’re talking in under eight months, which then allowed them to retire some debt, which then allowed them to get the financing to make this acquisition. There is a tangible manifestation of everything we’ve been talking about. The board was on board, right, the CEO wanted to make this acquisition, this strategy was set, because this is the primary one that they had to execute on.  Procurement, AP, their financier partners, their technology partners all got read in and they executed it beautifully. And now you have a new entity, the combination of those two, in much better shape and claims much more market share than they did before. And many cases not all, but the suppliers that that serve them are certainly better off today than they were pre merger. So that’s a feel good story, on the kinds of things that optimizing working capital can do for an organization just beyond simple metrics.

 

Craig Jeffery  32:44

It’s a lot more than an interest, because you’re talking about beverages, whether it’s coffee, soda, beer, you know, you also brought that that aspect of it was they were optimizing their working capital, and they made the pitch not just like, hey, I’m going to extend my terms. But now I can also buy more. And that changed the, OK, I can give a little bit up on now I’m collecting 120 days, by now I’m selling more, and I make quite a bit more margin than my cost of my cost of capital by funding you as a trading partner, a really, really great story, Brent,

 

Brent Kinman  33:21

just not let this fact be the last. And when COVID kicked off, there were some pretty neat stories about how to bring in technology providers and financiers, to improve the health of the supply chain. That is a reason, believe it or not to optimize one’s payables as well, because the ability to buy more or to give suppliers, if you will, shame proof mechanisms by which to control the timing of their payment is another worthy goal that is kind of wrapped around, you know, just optimizing, you know, inside your four walls that can have big effects to your supply base.

 

Craig Jeffery  34:02

This is an unfair question, but I know you’ll be able to handle it. Just in time inventory used to be such a big deal as a way of moving stuff off our balance sheet, given the supply chain disruptions that we’ve seen over the last Oh, I don’t know, how many years. Has that fallen greatly out of favor? Or is it still applicable in certain industries?

 

Brent Kinman  34:23

Let’s go to automotive real quick, because I think this is the most illustrative story out there about the thinning supply chains and the disruptions with just in time inventory. The TPS, I believe it’s called the Toyota Production System, and all the lean manufacturing principles that came out of that. Well, if you even look to this day, right, Toyota never ran out of inventory. They didn’t run out of chips, but yet they were the ones that kicked off this secular trend of just in time inventory. I think many in the automotive industry, but in others, they read the book, Eliyahu Goldratt, and all of the I forget the Theory of Constraints and all those kinds of things. They misread what Toyota was actually trying to say, in terms of supply chain resilience. So ultimately, the industry and from an inventory perspective, thought that wherever you see inventory where there’s work in progress, or final or final stock, that was where the inefficiencies are, were and to some degree, they’re not wrong. But they took it to the extreme to where they did not account for some of the disruptions. So you know, just like the chips shortage that we’re in right now, that’s a critical component that makes a car go from A to B. And someone decided, we should keep that we should literally be pulling it off the truck and putting it in the car. Toyota never said that. But a lot of the automatic auto manufacturers and and those that serve them certainly did. So be careful with inventory. It is the largest swing in most cash conversion cycles. That’s about the maximum expression, be careful that I can give you maybe a topic for a different day.

 

Craig Jeffery  36:18

I liked your oxygen example. And this one from the automotive industry is good as well. I have a friend who used to say a nickel holding up $1. Where there’s something that holds it back and it’s like I don’t know what those chips cost. But cars don’t cost $1.  Some good lessons learned across the board. Brent, thank you so much for your comments today at working capital, optimizing it. The view of treasures, very much appreciate you talking about working capital management foundations with me today.

 

Brent Kinman  36:45

Craig, it was great talking with you and look forward to us catching up soon.

 

Announcer  36:52

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