Working capital management also includes the optimization of receivables management and payables, including supply chain financing. This involves short payment terms to customers and the longest possible payment terms to suppliers.
How are supply chain activities financed?
Supply chain financing refers to the use of financial tools and methods to increase the efficiency of capital flow along the supply chain. Modern tools offer companies in purchasing the opportunity to finance supplier invoices with flexible payment terms. However, careful consideration is required when implementing such tools to ensure that the interests of all parties in the supply chain are taken into account.
How should receivables be handled?
Accounts receivable management is a central component of working capital management and focuses intensively on handling and controlling customer receivables. It aims to strengthen liquidity through proactive collection of outstanding payments and reduce dependency on external funding. Effective strategies include accelerating the receipt of payments by tightening payment terms and establishing credit limits for customers to control potential bad debts. Complementing this, a structured dunning system – characterized by systematized and timely reminders – helps companies effectively reduce late payments.
How should liabilities be treated?
As part of working capital management, accounts payable management plays a crucial role in optimizing payables to suppliers. It enables companies to improve their liquidity and financial stability by closely monitoring and managing payment terms and conditions without jeopardizing valuable relationships with supplier partners.
Payment arrangements that are carefully negotiated with key suppliers can often result in improved terms that benefit both parties. Standardizing purchasing terms to minimize operational complexity is also an effective strategy.
While extended payment terms may seem attractive, integrity in business relationships must always be maintained, with reliability a top priority on both sides. In an ideal state, there is a balance between trade payables and the sum of receivables and inventories.
Long-term effects and solutions
Optimizing working capital management is a long-term issue that goes far beyond a short-term approach. The thorough analysis of the market situation, inventory situation and supply chain is essential to find and successfully implement the appropriate solution approaches.
Reduce procurement costs: Potential savings in the six- to seven-digit range
Go beyond improving your working capital management and bring your return on investment out of the shadows. Substantial potential is possible in the area of direct costs. Weakened raw material and energy prices as well as the economic situation support this. Book a potential analysis by Kloepfel Consulting to get exact figures. Further levers are conceivable: Reducing scrap and waste a higher material efficiency can be created. A standardization of products in turn helps to reduce the variety of articles or suppliers. Furthermore, with Kloepfel Consulting you could tender and bundle raw materials, align payment terms and increase cash discount and optimize your logistics.
Let us amaze you with six- to seven-figure savings potentials and book a potential analysis for your direct and indirect purchasing. Our experts will be happy to support you as temporary colleagues and coaches. Book a non-binding informational interview.
Lassen Sie sich von uns mit sechs- bis siebenstelligen Einsparpotenzialen in Erstaunen versetzen und buchen Sie eine Potenzialanalyse für Ihren direkten und indirekten Einkauf. Unsere Fachleute unterstützen Sie gerne als Kollegen und Coaches auf Zeit. Buchen Sie ein unverbindliches Informationsgespräch.
Part 2: Receivables management and liabilities
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