Working Capital Management through dynamic adjustment of Credit Periods

Working Capital Management is a key driver of organizations' profitability and cash flow position. Firms with robust working-capital management systems in place can better balance their cash inflows & outflows, thereby reducing external financing requirements. A key component of managing a company's cash conversion cycle is proactive management of the customer & supplier credit periods, in a manner that ensures cash inflows & outflows match-up in an optimal fashion.

An integrated easy-to-use working-capital management solution allows a firm's business end-users to dynamically manage the credit periods for the various suppliers & vendors, as well as monitor the impact of such dynamic adjustments on net cash flows. With such a solution in place, the company also benefits from early-warning signals of potential cash shortfalls. The working-capital management solution integrates seamlessly with a risk-based customer classification solution, enabling business end-users to take credit-period adjustment decisions driven by customers' risk scores.

Key Features

Monitor transaction activity by week, in aggregate as well as by customer and by vendor
Examine cash inflow schedule across weekly time buckets, in aggregate and by customer
Track cash outflow requirements by week, in aggregate and by vendor
Cross-reference cash inflows & outflows across weekly time buckets to monitor net cash flows
Drill down to zero-in on customers & vendors that are key drivers of cash flows for each week
Dynamically adjust credit periods at a customer & vendor level, and monitor the effect on net cash flows

Business Benefits

Visually-appealing decision engine easily usable by a wide range of business end-users
Single-window view of the cash flow impact of customer & vendor transactions
Real-time impact analysis of the dynamic adjustment of customer & vendor credit periods
Easy-to-use handle for proactive working-capital and cash-flow management
Early-warning signals of potential cash shortfalls and related funding requirements
Integrated solution to govern credit-period adjustment driven by risk-based classification of customers

Analytics Backbone

Corporate Finance Analytics
Cash Flow Modelling
Scenario Analysis
Sensitivity Analysis
Visual Analytics
Exploratory Analysis

Technology Variants

Tableau
Qlik View
SAS Visual Analytics
SAP Lumira
Oracle
R

The solution is technology-agnostic, and available over a range of technology platforms. Choice of the best-suited platform for specific installations is governed by the existing ERP product being used by the client, in order to provide a cost-effective solution and to ensure seamless connectivity & integration. Open-source adaptations of the solution are also available to reduce the total cost of ownership for the client.