Ways Out of the Working Capital Trap

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 ?             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©) approach will be presented, a concept that measures the contribution of procurement to the company's success.