Ways to improve collaboration between finance and operations

Working capital is the lifeblood of every business — the measure of how effectively a company can finance its daily operations and still stay agile for growth. Yet, many businesses overlook how strategic working capital management can unlock massive potential for expansion, stability, and profitability.

In today’s fast-paced financial environment, leveraging your working capital efficiently isn’t just smart — it’s essential. From optimizing cash flow to embracing automation, every decision you make impacts your company’s ability to grow sustainably.

In this article, we’ll explore eight actionable tips that will help you better manage your working capital and use it as a powerful lever for growth — while showcasing how platforms like Frejia make this process seamless and intelligent.

Understand your cash conversion cycle

Your cash conversion cycle (CCC) is one of the most critical metrics in financial management. It measures how long it takes for your company to turn investments in inventory and resources into cash flow from customer payments.

Understanding this cycle helps you pinpoint inefficiencies and identify areas for improvement. Businesses with shorter CCCs often have stronger liquidity, giving them more freedom to invest or pivot when opportunities arise.

Key insight

Regularly monitoring your CCC allows you to detect cash flow bottlenecks before they become serious problems. The shorter your cycle, the more capital you have available for reinvestment and growth.

Optimize accounts receivable

Delayed payments are one of the most common causes of cash flow strain. When customers don’t pay on time, it creates a ripple effect that can slow down every other part of your business.

To mitigate this, set clear payment terms, use automated reminders, and provide multiple payment options to your clients. Automating receivables tracking — as Frejia does through its AI-driven system — ensures you stay on top of every invoice.

Try this workflow for smoother receivables:

1. Send invoices automatically upon delivery.

2. Schedule friendly reminders three days before due dates.

3. Offer small discounts to encourage early payments.

“Healthy receivables mean healthier growth — consistent inflow is the heartbeat of a thriving business.”

Keep a close eye on payables

Managing what you owe is just as important as managing what you’re owed. Stretching your payables strategically can help you maintain liquidity, but delaying payments excessively may harm supplier relationships.

A good rule of thumb: pay on time, but not too early. This keeps cash in your system longer while maintaining your reputation for reliability.

Best practices for payables management:

• Negotiate better terms with long-term partners.

• Automate recurring payments for predictable expenses.

• Prioritize vendors based on urgency and discounts offered.

By using Frejia’s payment workflows, you can automate and track every outgoing payment, ensuring accuracy, timeliness, and transparency across your entire finance team.

Streamline your inventory

Inventory can be one of the largest drains on working capital if not managed carefully. Every item sitting unsold on a shelf represents cash that could be used elsewhere in your business.

Adopting efficient inventory management strategies — such as demand forecasting, just-in-time systems, or automated stock alerts — helps reduce holding costs and free up capital.

Tips to manage inventory efficiently

• Use analytics tools to predict demand trends.

• Avoid overstocking by setting reorder thresholds.

• Review and clear slow-moving items regularly through promotions or bundles.

Example metric to track:

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

A high turnover ratio suggests efficient inventory management and healthy demand.

Leverage technology to automate processes

Technology has transformed financial management — and automation is the driving force. By automating manual workflows, your business can minimize errors, save time, and gain real-time visibility into its cash flow.

With Frejia’s automation tools, you can:

• Track all transactions automatically.

• Consolidate financial data across multiple accounts.

• Detect fraud or anomalies the moment they occur.

Automation doesn’t just improve accuracy; it empowers decision-making. With your team spending less time on repetitive tasks, you can focus on analysis, strategy, and growth.

“Every hour saved on manual finance is an hour gained for strategy.”

Maintain a safety buffer

Even with careful planning, unexpected expenses and market fluctuations can impact your cash flow. Having a safety buffer ensures your business remains resilient through uncertainty.

Think of it as your financial safety net — funds you can rely on during lean months or in emergencies. This buffer doesn’t just offer protection; it provides peace of mind, allowing you to make bolder, more confident business decisions.

Best practice:

• Save at least 10–20% of your monthly operating expenses.

• Keep these funds in a separate, easily accessible account.

Good financial planning starts with visibility and discipline.

Reinforce collaboration between departments

Working capital management isn’t a one-department responsibility. Finance, operations, sales, and procurement all influence the company’s cash flow.

Encouraging collaboration between these teams ensures decisions are made with a holistic view of your financial situation. For instance, sales should align with inventory planning, and finance should share insights on payment trends with procurement.

How to foster collaboration

• Share real-time dashboards across teams.

• Hold monthly cross-departmental financial reviews.

• Define clear KPIs for receivables, payables, and stock management.

Frejia’s dashboards make this simple — providing unified visibility across departments so your entire organization works from the same source of truth.

Invest excess liquidity wisely

If you have surplus working capital, putting it to work can create additional value for your business. Idle cash loses value over time, but low-risk investments can generate stable returns without compromising flexibility.

Consider allocating some of your excess funds into:

• High-yield savings accounts.

• Government or corporate bonds.

• Short-term money market instruments.

Just ensure these investments remain liquid — you should be able to access them quickly if operating needs arise.

Example: calculating return on investment

function calculateROI(gain, cost) {
  return ((gain - cost) / cost * 100).toFixed(2) + "%";
}

console.log(calculateROI(12000, 10000)); // "20%"

This simple function helps you evaluate how efficiently your investments generate returns.

Final thoughts

Effective working capital management is about balance — keeping enough liquidity to operate smoothly while investing strategically for growth. When managed well, it becomes a catalyst for efficiency, innovation, and resilience.

Frejia empowers businesses to take control of their finances through automation, transparency, and AI-driven insights. By simplifying the complexity of financial workflows, we help teams make better, faster, and smarter decisions every day.

“Working capital efficiency isn’t just about managing money — it’s about managing momentum.”