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.

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