Cash flow management is closely linked to profitability and in today’s market, firms are rightly focusing more closely on their cash collection policies. Managing work-in-progress (WIP) and lock-up, which are both closely linked to good cash flow, are core to good financial management.
Lock-up is the term widely used to describe the amount of cash a firm has tied up in working capital, and this is largely determined by the amount of WIP and debtors. The secret of success in lock-up management is to turn both of these into cash as quickly as possible and so improve cash flow.
