Especially in times of an economic boom following a crisis,
companies have to deal with the phenomenon of the "working capital
trap," which 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. As a consequence of cost savings, this situation is
often reinforced by a low level of inventory.
This book takes up the problem and shows ways of escaping the
"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 amount of in-house financing possible. Subsequently,
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 over the following topics: The
Management of Payment Terms, Inventory Management and Product Group
and Supplier Management
From the 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" (PVA(c)) approach will be presented, a concept that
measures the contribution of procurement to the company's
success.
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