Scarce resources and unstable supply chains
In times of scarce resources and unstable supply chains, the importance of working capital management is increasing significantly. It is often not possible to expand this area on one’s own.
The importance of working capital management
Before the coronavirus crisis, working capital management in the sense of optimized—usually minimized—inventory levels, short payment terms for customers, and long payment terms for suppliers was a topic that most companies considered to be settled. The processes were regarded as optimal. Cash flows were also significantly improved in some cases through factoring and reverse factoring measures.
Challenges in the current situation
The disruptions to supply chains, some of which are still ongoing and not solely the result of the coronavirus pandemic, are currently forcing you to rethink your approach, and working capital management processes (and algorithms) that once functioned well now need to be adapted to the new challenges. It is often not possible to implement this necessary change in parameters in a timely manner on your own.
Inventory analyses and liquidity planning
Inventory analyses provide you with information about the items you actually need and the quantities required, which is normally part of your daily business when supply chains are stable. However, the information currently received from customers and suppliers regarding delivery dates and quantities varies at short intervals. These changes, some of which occur on a weekly basis, affect your liquidity planning and cash management.
Support with short-term financial planning
Additional financing requirements for temporary inventory adjustments, and in some industries also for the creation or expansion of inventories to maintain delivery capacity, are the most obvious demands on companies’ finance departments. We are happy to support you in determining your short-term financing requirements by introducing weekly rolling liquidity planning to keep track of upcoming developments and changes in expected cash flows.
Long-term liquidity planning for tailor-made financing
Liquidity planning resulting from integrated corporate planning is a useful addition for mapping longer planning horizons. Regular (monthly) forecasting quantifies the impact of actual figures on the expected annual result and provides indications of where action is needed.
Based on this information, the amount and term of the necessary financing, as well as the amount and duration of the repayment of this financing, can be determined. Negotiations with financing partners are made considerably easier.
Contact i-canvas about working capital management
We are happy to provide you with further information and answer any questions you may have, and we invite you to come in for a no-obligation consultation.
Your contact:
Principal i-canvas
t.gabor@i-canvas.de
+49 531 180 59 300
