1 00:00:04,200 --> 00:00:07,920 Sean Aylmer: Welcome to the Fear & Greed Daily Business Interview. Working capital 2 00:00:07,950 --> 00:00:11,459 Sean Aylmer: is the lifeblood of any business. It provides a measure 3 00:00:11,460 --> 00:00:14,190 Sean Aylmer: of the overall health of a company and an insight 4 00:00:14,190 --> 00:00:19,050 Sean Aylmer: into the way management teams operate. Managing working capital is 5 00:00:19,050 --> 00:00:22,650 Sean Aylmer: fundamental to any business, but it isn't always done well, 6 00:00:22,710 --> 00:00:25,829 Sean Aylmer: nor is it always easy to do. (inaudible) , a 7 00:00:25,829 --> 00:00:28,650 Sean Aylmer: great supporter of Fear & Greed, has just released its 11th 8 00:00:31,320 --> 00:00:34,439 Sean Aylmer: edition of its Working Capital report. To talk us through 9 00:00:34,440 --> 00:00:37,739 Sean Aylmer: the findings, I welcome this morning, Jason Ireland and Sean 10 00:00:37,740 --> 00:00:41,400 Sean Aylmer: Wiles, partners at McGrathNicol Advisory, and great supporter of Fear & 11 00:00:41,400 --> 00:00:43,950 Sean Aylmer: Greed. Jason, Sean, welcome back to Fear & Greed. 12 00:00:44,370 --> 00:00:44,909 Jason Ireland: Thank you, Sean. 13 00:00:45,150 --> 00:00:45,390 Sean Wiles: Thanks Sean. 14 00:00:46,050 --> 00:00:48,690 Sean Aylmer: Sean, let's start with you, how about you define working 15 00:00:48,690 --> 00:00:52,170 Sean Aylmer: capital for us, as per this report, and maybe take 16 00:00:52,170 --> 00:00:53,638 Sean Aylmer: us through some of the headline results? 17 00:00:54,150 --> 00:00:58,500 Sean Wiles: Yeah, thanks, Sean. We view working capital of an organization 18 00:00:58,590 --> 00:01:02,069 Sean Wiles: as that part of their trading that hasn't yet translated 19 00:01:02,070 --> 00:01:07,289 Sean Wiles: into cashflow. So, we look at accounts receivable, so sales 20 00:01:07,289 --> 00:01:11,489 Sean Wiles: made but not collected, accounts payable, purchases made but not 21 00:01:11,490 --> 00:01:16,350 Sean Wiles: paid for, and inventory held, so inventory manufactured or bought 22 00:01:16,350 --> 00:01:19,410 Sean Wiles: that they haven't yet sold. So, the combination of those 23 00:01:19,410 --> 00:01:24,208 Sean Wiles: things makes up the networking capital of an organization. And 24 00:01:24,270 --> 00:01:28,139 Sean Wiles: for this year, the main headline, Sean, was that there 25 00:01:28,139 --> 00:01:32,759 Sean Wiles: was a material contraction in the working capital cycle of 26 00:01:32,760 --> 00:01:35,399 Sean Wiles: the organizations we looked at compared to last year. And 27 00:01:35,400 --> 00:01:40,380 Sean Wiles: we looked at 139 ASX listed companies in our analysis, and 28 00:01:40,380 --> 00:01:42,959 Sean Wiles: the average cycle, so the length of time the companies 29 00:01:42,959 --> 00:01:46,410 Sean Wiles: held working capital for, shortened by 5. 6 days or 30 00:01:46,410 --> 00:01:50,430 Sean Wiles: close to a week, which released an additional $ 12. 3 31 00:01:50,460 --> 00:01:55,680 Sean Wiles: billion in cash from that working capital. But interestingly, Sean, 32 00:01:55,680 --> 00:01:59,160 Sean Wiles: for us, 53% of the sample, so just over half, 33 00:01:59,670 --> 00:02:03,240 Sean Wiles: were able to achieve the reduction, the other 47% weren't. 34 00:02:03,330 --> 00:02:06,120 Sean Wiles: So, there was a real mix of results in the 35 00:02:06,210 --> 00:02:09,180 Sean Wiles: analysis, and a real spread of results as well. There 36 00:02:09,180 --> 00:02:12,210 Sean Wiles: was greater than 70 days between the best and worst 37 00:02:12,210 --> 00:02:15,839 Sean Wiles: working capital cycles across the sample of operators that we 38 00:02:15,840 --> 00:02:18,599 Sean Wiles: looked at. So, there were some real winners and losers 39 00:02:18,599 --> 00:02:21,450 Sean Wiles: if you like, at the company level within our analysis. 40 00:02:22,020 --> 00:02:24,449 Sean Aylmer: Pardon my ignorance on this, Sean, but is there an 41 00:02:24,449 --> 00:02:28,769 Sean Aylmer: optimal day's working capital? It's reduced, that's a good thing, 42 00:02:29,190 --> 00:02:30,780 Sean Aylmer: but you don't want it to go too low, do you? 43 00:02:32,010 --> 00:02:35,190 Sean Wiles: Jason and I say that the optimal working capital cycle is 44 00:02:35,190 --> 00:02:40,319 Sean Wiles: what you have agreed with your customers and suppliers, essentially. 45 00:02:40,320 --> 00:02:43,290 Sean Wiles: Now, obviously you'd try and negotiate those to be as, 46 00:02:43,350 --> 00:02:45,810 Sean Wiles: particularly on the collection side, as low as possible, so 47 00:02:45,810 --> 00:02:48,600 Sean Wiles: you're collecting your sales as quickly as you can. But 48 00:02:48,600 --> 00:02:51,510 Sean Wiles: really the optimal cycle is if you've agreed a set 49 00:02:51,510 --> 00:02:53,340 Sean Wiles: of terms with your customers and a set of terms 50 00:02:53,340 --> 00:02:56,459 Sean Wiles: with your suppliers is that you're sticking to those or 51 00:02:56,460 --> 00:02:59,189 Sean Wiles: bettering them as much as you can, through good process 52 00:02:59,490 --> 00:03:03,750 Sean Wiles: and good discipline, and you're holding obviously enough inventory to 53 00:03:03,750 --> 00:03:06,839 Sean Wiles: be able to service your customers, but you're not holding 54 00:03:06,840 --> 00:03:10,738 Sean Wiles: too much inventory that it's locking up cash unnecessarily. So, 55 00:03:11,400 --> 00:03:14,369 Sean Wiles: there's no number that we'd put to that, but just 56 00:03:14,370 --> 00:03:17,310 Sean Wiles: an optimal cycle that makes sense for your business. 57 00:03:17,369 --> 00:03:19,859 Sean Aylmer: Okay. So, there's been a reduction in days working capital. 58 00:03:19,860 --> 00:03:22,110 Sean Aylmer: Jason, what are some of the key drivers for that? 59 00:03:22,800 --> 00:03:26,639 Jason Ireland: Thanks, Sean. As Sean said, there's three elements and we 60 00:03:26,639 --> 00:03:28,950 Jason Ireland: measure them in days, so the length of the cycle. 61 00:03:28,950 --> 00:03:33,360 Jason Ireland: So, days sales outstanding, how quickly companies can collect from 62 00:03:33,360 --> 00:03:37,980 Jason Ireland: their customers, days inventory outstanding, how many days of potential 63 00:03:37,980 --> 00:03:42,750 Jason Ireland: sales and inventory they're holding, and days payable outstanding, how 64 00:03:42,750 --> 00:03:46,379 Jason Ireland: long companies are taking to pay their suppliers, and collectively 65 00:03:46,380 --> 00:03:51,150 Jason Ireland: that's the net days working capital. That 5. 6 day 66 00:03:51,179 --> 00:03:54,570 Jason Ireland: reduction that Sean talked about was made up of quite 67 00:03:54,600 --> 00:03:58,560 Jason Ireland: material movements in the three elements. So, start with inventory, 68 00:03:58,560 --> 00:04:01,710 Jason Ireland: which is often the biggest working capital cash tie up, 69 00:04:02,160 --> 00:04:05,550 Jason Ireland: that came down by 12.2 days back to 88 days. 70 00:04:05,790 --> 00:04:08,760 Jason Ireland: In fact, that's really starting to settle back the pre- 71 00:04:08,790 --> 00:04:11,279 Jason Ireland: COVID numbers, but it's not there yet. So, we think 72 00:04:11,279 --> 00:04:15,240 Jason Ireland: there's still room for improvement in lowering to that optimal 73 00:04:15,240 --> 00:04:20,010 Jason Ireland: stock level. What was driving that? Throughout COVID we saw 74 00:04:20,010 --> 00:04:23,700 Jason Ireland: a lot of companies because there was disruption in supply 75 00:04:23,700 --> 00:04:28,650 Jason Ireland: chains. When supply chains opened up, they sometimes over- ordered, 76 00:04:28,949 --> 00:04:31,050 Jason Ireland: and so they ended up at the end of the 77 00:04:31,050 --> 00:04:32,970 Jason Ireland: year with a little more than they had the previous 78 00:04:32,970 --> 00:04:35,550 Jason Ireland: year. So, that's starting to move back to more normal 79 00:04:35,550 --> 00:04:39,809 Jason Ireland: levels. There was a similar movement in days payable outstanding, 80 00:04:39,809 --> 00:04:43,350 Jason Ireland: which is quite interesting. So, they actually paid on average 81 00:04:43,650 --> 00:04:49,350 Jason Ireland: their supplier's 12. 9 days more quickly. Which is good 82 00:04:49,350 --> 00:04:51,660 Jason Ireland: in the overall scheme of things for a company to 83 00:04:51,660 --> 00:04:54,930 Jason Ireland: try and get that down, not stretch its supply chain 84 00:04:54,930 --> 00:04:58,618 Jason Ireland: too much, not stretch its creditors and the people that 85 00:04:58,620 --> 00:05:01,589 Jason Ireland: supply it with its goods and services to the point 86 00:05:01,650 --> 00:05:04,859 Jason Ireland: where they break. So, that's a pretty good little cycle 87 00:05:04,859 --> 00:05:08,790 Jason Ireland: there, where, as companies cleared some inventory, they use that 88 00:05:08,790 --> 00:05:13,350 Jason Ireland: additional cash to pay down their suppliers, which is quite 89 00:05:13,350 --> 00:05:16,320 Jason Ireland: good for stability. And then the final element, which is 90 00:05:16,320 --> 00:05:20,639 Jason Ireland: really the differentiator, because those first two canceled each other 91 00:05:20,639 --> 00:05:25,320 Jason Ireland: out, was the days sales outstanding. So, overall, the companies 92 00:05:25,320 --> 00:05:29,520 Jason Ireland: we surveyed were able to collect 5. 8 days more 93 00:05:29,520 --> 00:05:32,130 Jason Ireland: quickly than they did last year. So, that really was 94 00:05:32,130 --> 00:05:36,059 Jason Ireland: the differentiator, the first two canceling each other out. Those 95 00:05:36,059 --> 00:05:40,619 Jason Ireland: days sales outstanding, again, is really just settling back to 96 00:05:40,619 --> 00:05:43,051 Jason Ireland: a number close to pre- COVID. 97 00:05:43,051 --> 00:05:46,710 Sean Aylmer: Okay. CFO is all important in this process, and I know 98 00:05:46,710 --> 00:05:49,589 Sean Aylmer: you took the pulse of Australian CFOs by conducting a 99 00:05:49,589 --> 00:05:53,039 Sean Aylmer: survey as part of the report. It came out labor 100 00:05:53,040 --> 00:05:56,580 Sean Aylmer: shortages, higher input costs, and increased funding costs have made 101 00:05:56,580 --> 00:05:59,639 Sean Aylmer: it tougher for business over the last 12 months. But 102 00:05:59,639 --> 00:06:03,930 Sean Aylmer: Jason, how did they fare in terms of managing working 103 00:06:03,930 --> 00:06:07,320 Sean Aylmer: capital, and what are their main challenges, I suppose? There's 104 00:06:07,320 --> 00:06:10,229 Sean Aylmer: been an improvement, but what are they still finding that they're 105 00:06:10,230 --> 00:06:11,099 Sean Aylmer: coming up against? 106 00:06:11,490 --> 00:06:14,609 Jason Ireland: Yes. So, in terms of how did they fare, they 107 00:06:14,610 --> 00:06:18,209 Jason Ireland: fared pretty well, as we talked about, those numbers seemed 108 00:06:18,209 --> 00:06:21,089 Jason Ireland: to move in the right direction, so they fared fairly 109 00:06:21,089 --> 00:06:24,390 Jason Ireland: well. But CFOs are paid to worry, so when they 110 00:06:24,390 --> 00:06:28,320 Jason Ireland: look forward, they're still very concerned and they think it 111 00:06:28,320 --> 00:06:30,900 Jason Ireland: will become harder. The numbers that came out of the 112 00:06:30,900 --> 00:06:35,909 Jason Ireland: survey were actually that 73% of the CFOs we surveyed 113 00:06:35,969 --> 00:06:40,830 Jason Ireland: actually found it really difficult in 2023. And then, again, 114 00:06:40,830 --> 00:06:43,800 Jason Ireland: when they look forward, most of them thought it will 115 00:06:43,800 --> 00:06:47,130 Jason Ireland: be even more difficult in 2024. And some of the 116 00:06:47,130 --> 00:06:51,539 Jason Ireland: difficulties they're highlighting are that when they look forward, a 117 00:06:51,540 --> 00:06:55,920 Jason Ireland: lot of those economic challenges, most of them don't feel 118 00:06:55,920 --> 00:06:59,400 Jason Ireland: like they're getting easier. And so, they're concerned that they'll 119 00:06:59,400 --> 00:07:03,359 Jason Ireland: have enough people to enable them to continue on this 120 00:07:03,360 --> 00:07:06,630 Jason Ireland: journey of improvement in working capital. They're concerned that their 121 00:07:06,630 --> 00:07:09,690 Jason Ireland: processes aren't quite good enough yet, so they need to 122 00:07:09,690 --> 00:07:13,710 Jason Ireland: continue that improvement there. And they're also concerned that their 123 00:07:13,710 --> 00:07:17,190 Jason Ireland: systems and their data and access to data is not 124 00:07:17,190 --> 00:07:19,800 Jason Ireland: as good as it could be. So, as I've said, they've 125 00:07:19,800 --> 00:07:23,190 Jason Ireland: gone pretty well, but they still look forward with some trepidation. 126 00:07:23,880 --> 00:07:26,190 Sean Aylmer: Stay with me, Jason and Sean, we'll be back in 127 00:07:26,190 --> 00:07:36,930 Sean Aylmer: a minute. My guests today are Jason Ireland and Sean Wiles, partners at 128 00:07:36,960 --> 00:07:41,490 Sean Aylmer: McGrathNicol Advisory. Okay, Sean, bringing you back into it, which 129 00:07:41,490 --> 00:07:46,080 Sean Aylmer: sectors performed particularly well in 2023, and perhaps which sectors 130 00:07:46,080 --> 00:07:47,490 Sean Aylmer: have got some room for improvement? 131 00:07:48,450 --> 00:07:51,840 Sean Wiles: Yeah, Sean, interestingly, for the first time in the 11 132 00:07:51,840 --> 00:07:54,840 Sean Wiles: years that we've delivered our report, there was a decrease 133 00:07:54,840 --> 00:07:58,139 Sean Wiles: in days working capital across all the sectors we covered, 134 00:07:58,740 --> 00:08:01,320 Sean Wiles: and the biggest improvements were actually achieved in some of 135 00:08:01,410 --> 00:08:05,849 Sean Wiles: those more working capital intensive sectors. So, you'll get agriculture, 136 00:08:06,480 --> 00:08:09,510 Sean Wiles: food and beverage, those sort of sectors that are manufacturing- 137 00:08:09,510 --> 00:08:13,260 Sean Wiles: heavy or production- heavy, saw their working capital cycle shortened 138 00:08:13,260 --> 00:08:16,590 Sean Wiles: by a week or more in 2023, and mining and 139 00:08:16,590 --> 00:08:20,160 Sean Wiles: retail actually weren't that far behind either. So, as Jason 140 00:08:20,160 --> 00:08:23,250 Sean Wiles: mentioned, the big driver in these sectors was reduced inventory. 141 00:08:23,820 --> 00:08:27,060 Sean Wiles: And not surprisingly, in some of the sectors where we've 142 00:08:27,060 --> 00:08:31,890 Sean Wiles: seen some stress reported recently, building products and construction being the 143 00:08:31,890 --> 00:08:35,370 Sean Wiles: main ones. There were small gains found, and this was 144 00:08:35,610 --> 00:08:39,479 Sean Wiles: largely due to that material shortening of the supplier payment 145 00:08:39,480 --> 00:08:42,449 Sean Wiles: cycle that Jason referred to, which is now at a 146 00:08:42,450 --> 00:08:46,500 Sean Wiles: decade low level for some operators in construction. And actually, 147 00:08:46,500 --> 00:08:49,110 Sean Wiles: in construction and building products, we're starting to see the 148 00:08:49,110 --> 00:08:53,130 Sean Wiles: reemergence of what we call a structural funding gap in 149 00:08:53,130 --> 00:08:55,500 Sean Wiles: the working capital cycle of those sectors. So, that's where 150 00:08:55,500 --> 00:08:59,218 Sean Wiles: operators are paying their suppliers more quickly than they're collecting 151 00:08:59,219 --> 00:09:02,640 Sean Wiles: from their customers. And as you'd expect, that can contribute 152 00:09:02,640 --> 00:09:06,360 Sean Wiles: to more significant liquidity pressure, if not gotten on top 153 00:09:06,360 --> 00:09:06,990 Sean Wiles: of quickly. 154 00:09:07,590 --> 00:09:12,660 Sean Aylmer: So, broadly, the sectors who have done better are doing 155 00:09:12,660 --> 00:09:15,629 Sean Aylmer: better in terms of their working capital than those who 156 00:09:15,839 --> 00:09:17,130 Sean Aylmer: are struggling more broadly. 157 00:09:18,029 --> 00:09:21,570 Sean Wiles: Yeah. And I think part of that, Sean, is, and Jason mentioned 158 00:09:21,570 --> 00:09:24,300 Sean Wiles: this, some of the improvement has come in those sectors 159 00:09:24,300 --> 00:09:26,728 Sean Wiles: that were inventory heavy the year before, or held a 160 00:09:26,730 --> 00:09:29,429 Sean Wiles: lot more inventory through COVID. So, you're starting to see 161 00:09:29,429 --> 00:09:32,429 Sean Wiles: that natural release through food and beverage and some of 162 00:09:32,429 --> 00:09:34,740 Sean Wiles: those other sectors, where the supply chain was a little 163 00:09:34,740 --> 00:09:38,100 Sean Wiles: clunky for a few years. But yet, you are seeing 164 00:09:38,100 --> 00:09:43,110 Sean Wiles: in those project- heavy, construction and building products in particular, 165 00:09:43,110 --> 00:09:46,950 Sean Wiles: that have a big element of project management involved, and 166 00:09:46,950 --> 00:09:51,870 Sean Wiles: some good level of dependency across the supply chain, and 167 00:09:51,870 --> 00:09:55,559 Sean Wiles: they're dependent on both bigger suppliers and customers, as well 168 00:09:55,559 --> 00:09:59,340 Sean Wiles: as much smaller suppliers and customers, you're seeing the struggle 169 00:09:59,550 --> 00:10:04,139 Sean Wiles: in balancing and managing that working capital cycle, and the 170 00:10:04,139 --> 00:10:06,569 Sean Wiles: difficulty in doing so has definitely come through in the 171 00:10:06,570 --> 00:10:07,980 Sean Wiles: analysis over the last year. 172 00:10:08,429 --> 00:10:11,429 Jason Ireland: I'd say also Sean, that some of the sectors that 173 00:10:11,429 --> 00:10:15,840 Jason Ireland: have actually struggled at that headline level have still managed 174 00:10:15,840 --> 00:10:19,260 Jason Ireland: to improve working capital because they have had to. So, 175 00:10:19,290 --> 00:10:21,510 Jason Ireland: we always say, that if you're going to have tighter 176 00:10:21,510 --> 00:10:25,108 Jason Ireland: margins, lower profit. You can counteract some of that by 177 00:10:25,110 --> 00:10:29,279 Jason Ireland: actually turning that profit, collecting more quickly, and turning that 178 00:10:29,279 --> 00:10:32,460 Jason Ireland: cash through your business more quickly. So, some of those 179 00:10:32,460 --> 00:10:36,330 Jason Ireland: sectors, like construction, which had a tough year, actually still 180 00:10:36,330 --> 00:10:38,190 Jason Ireland: achieved improvement in working capital. 181 00:10:38,820 --> 00:10:42,360 Sean Aylmer: So, Jason, that's effective working capital management, is that what 182 00:10:42,360 --> 00:10:42,929 Sean Aylmer: it looks like? 183 00:10:43,259 --> 00:10:46,799 Jason Ireland: That's right, that's right. So, really focusing on it, really 184 00:10:46,799 --> 00:10:50,460 Jason Ireland: having a tight system and processes around it, despite what's 185 00:10:50,460 --> 00:10:53,790 Jason Ireland: happening in your sector, in some ways because of what's 186 00:10:53,790 --> 00:10:55,530 Jason Ireland: happening in your sector is key. 187 00:10:56,400 --> 00:10:58,590 Sean Aylmer: Okay, I have to bring a bit of patriotism into it. 188 00:10:58,590 --> 00:11:01,440 Sean Aylmer: Melbourne Cup day was yesterday, Sean, how do we stack 189 00:11:01,440 --> 00:11:02,850 Sean Aylmer: up against the rest of the world? 190 00:11:03,450 --> 00:11:07,559 Sean Wiles: We stack up well, Sean, Australian companies actually showed the 191 00:11:07,559 --> 00:11:11,610 Sean Wiles: largest improvement in days working capital of all the regions 192 00:11:11,610 --> 00:11:14,790 Sean Wiles: we covered, and a big driver of that was that 193 00:11:14,790 --> 00:11:18,689 Sean Wiles: they collected from their customers more quickly than their counterparts 194 00:11:18,690 --> 00:11:23,069 Sean Wiles: across Europe, across Asia and the US. But one area 195 00:11:23,070 --> 00:11:25,200 Sean Wiles: where we still lag, and we've talked a bit about 196 00:11:25,200 --> 00:11:29,429 Sean Wiles: it already, is inventory, some great gains made in 2023, 197 00:11:29,429 --> 00:11:32,730 Sean Wiles: and that released from 2022 and the COVID period that we 198 00:11:32,730 --> 00:11:36,959 Sean Wiles: talked about. But our cycles, our inventory cycles, remain one and 199 00:11:37,020 --> 00:11:42,329 Sean Wiles: a half times longer than the US and Asia, and 200 00:11:42,360 --> 00:11:45,300 Sean Wiles: no doubt there's an element of the tyranny of distance 201 00:11:45,300 --> 00:11:47,490 Sean Wiles: in all of that and in the metrics for local 202 00:11:47,490 --> 00:11:50,910 Sean Wiles: businesses, especially those that import and export. But it also 203 00:11:50,910 --> 00:11:54,300 Sean Wiles: shows that there is still room for further improvement in 204 00:11:54,300 --> 00:11:57,810 Sean Wiles: that part of the working capital cycle, around inventory management, particularly. 205 00:11:58,469 --> 00:12:02,550 Sean Aylmer: A final one for you, Jason, where do we stand post- 206 00:12:02,550 --> 00:12:06,270 Sean Aylmer: COVID? Have we learned our lessons through COVID? And inventory 207 00:12:06,270 --> 00:12:08,790 Sean Aylmer: management is obviously a very good one. Do you think 208 00:12:08,790 --> 00:12:10,830 Sean Aylmer: we're in a better place now than we were beforehand? 209 00:12:11,280 --> 00:12:13,559 Jason Ireland: I think we all had to... Businesses had to learn 210 00:12:13,559 --> 00:12:16,348 Jason Ireland: some very difficult lessons during COVID, we've talked about some 211 00:12:16,350 --> 00:12:20,700 Jason Ireland: of them reversing now, but I think those scars are well- 212 00:12:20,700 --> 00:12:24,569 Jason Ireland: worn still, and fresh. So, I think we have done 213 00:12:24,570 --> 00:12:26,699 Jason Ireland: a lot better and I think it comes down to 214 00:12:27,059 --> 00:12:30,990 Jason Ireland: learning those lessons. There's no doubt you can... Sean talked 215 00:12:30,990 --> 00:12:34,949 Jason Ireland: earlier about that difference between, even within sectors, there's quite 216 00:12:34,949 --> 00:12:37,978 Jason Ireland: a big variation between the metrics, and so you can 217 00:12:37,980 --> 00:12:40,890 Jason Ireland: see that some businesses inside a sector are doing far 218 00:12:40,890 --> 00:12:44,340 Jason Ireland: better than others. And that comes down to us often 219 00:12:44,340 --> 00:12:48,420 Jason Ireland: being best in class around process. And so, the companies 220 00:12:48,420 --> 00:12:50,969 Jason Ireland: that have really learned the lesson, so inventory was very 221 00:12:50,969 --> 00:12:56,100 Jason Ireland: difficult to order, both in demand forecasting but also access 222 00:12:56,100 --> 00:12:58,710 Jason Ireland: to it, so, many people have gotten better and better 223 00:12:58,710 --> 00:13:02,309 Jason Ireland: processes around that, so that they are, still within difficult 224 00:13:02,309 --> 00:13:06,509 Jason Ireland: circumstances, better at it. In terms of collections, a lot 225 00:13:06,509 --> 00:13:11,129 Jason Ireland: of businesses, the best businesses, understand more than ever every 226 00:13:11,129 --> 00:13:14,160 Jason Ireland: single step in that process, from when they start out 227 00:13:14,160 --> 00:13:16,530 Jason Ireland: on the journey with a new customer to when they 228 00:13:16,530 --> 00:13:18,960 Jason Ireland: make a sale, to when they collect from that customer. 229 00:13:18,960 --> 00:13:22,770 Jason Ireland: If you can map that cycle and then ensure somebody 230 00:13:23,070 --> 00:13:27,540 Jason Ireland: understands their part in that cycle, and understands their responsibility 231 00:13:27,540 --> 00:13:30,929 Jason Ireland: and what best practice is, then you are way ahead 232 00:13:30,929 --> 00:13:33,360 Jason Ireland: of the field. And so, there's no doubt even when 233 00:13:33,360 --> 00:13:36,569 Jason Ireland: we revert back to some of those survey responses we 234 00:13:36,570 --> 00:13:40,949 Jason Ireland: got, there was a concern around people and process, and 235 00:13:40,950 --> 00:13:44,219 Jason Ireland: that for us, as I said earlier, even if things 236 00:13:44,219 --> 00:13:47,369 Jason Ireland: are going more difficult for you in the economy in 237 00:13:47,369 --> 00:13:51,120 Jason Ireland: your market, if you can get that process right, then 238 00:13:51,120 --> 00:13:53,370 Jason Ireland: it stands you in good stead for years to come, 239 00:13:53,370 --> 00:13:56,160 Jason Ireland: because it becomes embedded, it becomes part of the way 240 00:13:56,160 --> 00:13:59,550 Jason Ireland: you do business, and that's such a competitive advantage. 241 00:14:00,150 --> 00:14:02,429 Sean Aylmer: Jason, Sean, thank you for talking to Fear & Greed. 242 00:14:03,599 --> 00:14:03,809 Sean Wiles: Thanks Sean. 243 00:14:03,809 --> 00:14:03,810 Jason Ireland: Thanks Sean. 244 00:14:03,810 --> 00:14:07,740 Sean Aylmer: That was Jason Ireland and Sean Wiles, partners at McGrathNicol 245 00:14:07,740 --> 00:14:10,710 Sean Aylmer: Advisory. This is the Fear & Greed Daily Business interview, join 246 00:14:10,710 --> 00:14:13,020 Sean Aylmer: us every morning for the full episode of Fear & Greed, 247 00:14:13,020 --> 00:14:16,980 Sean Aylmer: Australia's best business podcast. I'm Sean Aylmer, enjoy your day.