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.
