Working Capital Policy Report

The Working Capital Policy Report for Barclays PLC evaluates the company's current assets, mainly debtors and cash. The report highlights the importance of managing debtors, as high levels can block funds while low levels reduce liquidity. It also analyzes the bank's cash and bank balance, noting a continuous reduction in this asset. The report recommends maintaining stability in financial value to prevent threats to liquidity and working capital efficiencies.

Working Capital
Policy Report

TABLE OF CONTENTS
Working Capital Policy Report........................................................................................................3
Sundry Debtor of Barclay Bank ..................................................................................................3
Cash & Bank Balance of Barclays PLC......................................................................................3
References........................................................................................................................................4
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WORKING CAPITAL POLICY REPORT
Barclays is engaged in providing banking and financial services to the public. It is
universal bank as they operate in retail, wholesale and investment banking. Company is
operating in more than 50 countries and territories with the 48 million customers. Present
working capital policy report is focused on evaluation of currents assets of the bank mainly
debtors and cash.
Sundry Debtor of Barclay Bank
Trade receivables are significant part of the working capital because it consists major
portion of working capital. High debtors can create issue of excessive blockage of funds while
low debtors makes reduction in the liquidity of the company. Due to this aspect, it is important
to manage debtors
Table 1: Statement showing Sundry Debtor of Barclay Bank (GBP in millions)
2015 2014 2013 2012 2011
Receivables 415 334 181 252 375
Portion in
balance sheet
(%)
.04 .02 .01 .02 .02

By considering trade receivables of the Barclay Plc it can be noticed that there is
continuous decrease till 2013 and after it started increasing. This aspect shows that in past three
years there is improvement in liquidity position of the bank. Increase in debtor is due to
improving profitability of the organization. However, increasing debtors is also not a positive
sign for the financial position because it blocks the funds of the business (Annual report of
Barclay Plc, 2015). Thus, banking entities are required to maintain appropriate balance of
receivables in the balance sheet. By considering values of Barclay Plc it can be said that
company had attempted to manage stability in debtor value but it is continuously fluctuating.
Increasing debtors can lead to the increase in possibility of bad debts of the organization. This
aspect has direct impact on the credit risk of the company as it shows possibility of financial
loss that can be occurred due to non-payment by customers. However, annual report of
company shows that there is 2% reduction in credit impairment in comparison to previous year.
Recommendations
By considering figures of trade receivables of previous five year it can be noticed that
previously there was decreasing which later converted into increasing (Jain, 2004). Barclay Plc
is having good management polices but still they are required to work on stability. It is because,
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2015 2014 2013 2012 2011
0
50
100
150
200
250
300
350
400
450 415
334
181
252
375
Receivables
Mean (Receivables)
Illustration 1: Sundry Debtor of Barclay Bank (GBP in millions)

continuous increase in receivables can lead to the threat of high bad debts. For this purpose,
organization can set pre targets for the providing credit to their customers on the basis of
proportion to revenue and working capital.
Cash & Bank Balance of Barclay PLC
Management of cash and cash equivalents is important for banking industry because
poor management of this asset because it is the most frequent stumbling block. Cash and bank
balance of Barclay Plc is as follows:
Table 2: Statement showing Cash & Bank Balance of Barclay Bank (GBP in millions)
2015 2014 2013 2012 2011
Cash and dues 1011 1210 45687 86175 1812
Financial value of Cash & Bank Balance of Barclay Bank shows that there is continuous
reduction in this asset. This aspect is not favorable to the company. It is because; this aspect has
5
2015 2014 2013 2012 2011
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
1011 1210
45687
86175
1812
Cash and dues
Mean (Cash and dues)
Illustration 2: Cash & Bank Balance of Barclay Bank (GBP in millions)

adverse impact on the quick ratio of company. Furthermore, it can create server threats to
organization in future period (Annual report of Barclay Plc, 2015). However, annual report of
Barclay bank shows that corporate had performed strongly through improvement in lending and
cash management. In accordance with the financial strategy of bank they are planning to reduce
their cash balance in order to prevent blocking of funds (Confidential invoice accounting,
2015). However, such significant reduction in cash and bank balance is not prudent. However,
company is investing their cash in Commercial mortgages and business loans in global capital
market where there is less risk. In addition to this, they are also using their cash for Asset and
lease finance, trade and supplier finance and working capital solutions in order to earn high
revenues through interest income. By this approach, they are able to make increase in their
profitability but their liquidity is adversely affected.
Recommendations
In accordance with the trend of cash and bank balance of the organization they are
recommended to maintain stability in their financial value. It is because, changing policies can
create severe threat to their liquidity and working capital efficiencies. By considering their
present strategies, it can be noticed that banking entity is focused on improving profitability
instead to managing balance between their current assets (El‐Bannany, 2008). Due to this
aspect, they are required to focus on both profitability and liquidity.
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REFERENCES
Books and journals
El‐Bannany, M., 2008. A study of determinants of intellectual capital performance in banks. the
UK case. 9(3). pp.487 - 498
Jain, K. N., 2004. Working capital management. APH publishing.
Online
Annual report of Barclay Plc. 2015. [pdf]. Available through
<https://www.home.barclays/content/dam/barclayspublic/docs/InvestorRelations/
AnnualReports/AR2015/Barclays_PLC_Annual_Report_%202015.pdf>. [Accessed on
26th March 2016].
Confidential invoice accounting. 2015. [pdf]. Available through
<https://www.barclayscorporate.com/content/dam/corppublic/corporate/Documents/
confidential_invoice_discounting/cid_factsheet.pdf>. [Accessed on 26th March 2016].
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