Working capital management during the global financial crisis: the Australian experience

Purpose – This paper aims to document the measures taken by Australian corporate treasurers in the areas of cash, inventory, accounts receivable, accounts payable and risk management to survive the global financial crisis (GFC). Design/methodology/approach – Using qualitative techniques like interviews and a survey questionnaire, this paper summarises the various measures adopted by working capital managers. Findings – The results show that more than half of the participants in the survey altered their working capital management practices during the crisis. Capital expenditure was curtailed, as they aimed at preserving their cash levels while reducing inventory levels. Credit worthiness of institutions became more important, and there was a general decline in credit availability. The results also show that Australian working capital managers exhibit behavioural biases, particularly overconfidence. Originality/value – It is the first paper that uses open-ended questions to capture the effects of the GFC on working capital management in Australia.