infonet-economy

The "working capital trap" signifies a company's increasing need for financial liquidity in times of hindered access to debt capital, caused by the increasingly restrictive credit approval processes of financial institutions. Especially in times of an economic boom after a foregoing crisis, companies have to deal with such a phenomenon. As a consequence of cost savings this situation is often enforced by a low level of inventory.

This book picks that problem up and shows ways of escaping the "working capital trap" by identifying and strengthening in-house financing potential. First, different operating ratios will be introduced. These refer to the amount of capital committed to the flow of goods and to the possible amount of in-house financing. Thereafter, methods for consolidating in-house financing that are affected by procurement processes will be presented from the company's and the supply chain's perspective.

From a company´s perspective, the methods for consolidating the amount of in-house financing cover the following topics:
The Management of Payment Terms
Inventory Management
Product Group and Supplier Management

From a supply chain´s perspective, the following methods for extending the possible amount of in-house financing will be discussed:
- Finance-oriented Supply Chain Sourcing
- Supply Chain-oriented Supplier Financing
- Collaborative Cash-to-Cash Management
- Collaborative Cash Pooling and Netting
- Supply Chain Financing Platforms

The conceptual models will be clarified using a practical example from the automobile industry. Finally, the "procurement value added" will be presented, a concept that measures the contribution of procurement to the company´s success