We may be starting a new decade, but a few things remain the same. In particular, cash remains king as we head into 2010. Large companies have stockpiled record levels of the stuff, notes Standard & Poor’s senior index analyst, Howard Silverblatt, in this blog post from November 16, 2009. As of mid-November, cash levels at the companies in the S&P 500 were nearly 10 percent ahead of the record $773 billion they were holding at the end of the second quarter of 2009. “Companies now have more cash than they ever made in any one-year period,” Silverblatt writes. The record amounts of cash are a result of cost-cutting, along with slashed dividends and reductions in stock buybacks, Silverblatt notes.

The intensified focus on cash management at many companies likely played a role, as well. More than half – 53 percent – of the 350 respondents to KPMG’s 2009 cash survey had implemented a working capital improvement survey. That was a jump of 43 percent from a year earlier.

To boost working capital, most businesses zeroed in on several areas: better management of inventories, receivables, and payables, and engaging the larger organization in cash management. For instance, inventory management efforts centered on finding an optimal balance between stopping or reducing production and maintaining the ability to respond quickly to changes in customer demand.

Recievables management also has emerged as a key area in working capital management, given that about a fifth of respondents said that “customers stretching payment terms” would be one of the top three pressures facing their firms in the coming 12 months. To blunt the impact, some firms are asking for payment up front, while others are taking steps to clear up any discrepancies on their invoices before payment is due. On the payables front, businesses are taking greater care to make sure the correct terms are entered into their payment systems and that they’re capturing all the early-pay discounts due them.

Finally, the finance departments at a growing number of companies are working more directly with their sales colleagues. While few companies want to turn their sales teams into credit departments, many are engaging both finance and sales to develop strategies for working with customers during and after the sale.

These improvements notwithstanding, most organizations could do even more, the report notes. Several often-overlooked areas, including taxes, real estate, and pensions, offer valuable opportunities to wring even more cash from operations. “It’s not just about working capital,” says Lee Swinerd, director with KPMG’s advisory services group. “It’s about looking throughout the organization.”

Consider real estate. Swinerd and his colleagues have worked with a number of organizations that have negotiated rent reductions, often offering to extend the terms of their leases in return. Other companies have taken more aggressive steps to sublet or sell space that they’re not using.

The tax bill is another area that can yield savings, Swinerd notes. It can be difficult for finance departments, particularly at smaller firms, to keep tabs on changes to the tax code that could result in additional credits or deductions. As a result, they forgo opportunities to shave a few bucks from their tax bills.

The overall objective should be to scrutinize every source of cash inflow and outgo for opportunities to maximize cash, rather than pinning your hopes on uncovering a silver bullet or two. “They don’t exist,” Swinerd says. “You usually have to do 10 or 15 or 20 different things to get to the numbers you want.” ###