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What is working capital?

May 20, 2021 | Blog, Working Capital

As one of the most important indices of a company’s efficiency and financial health, working capital represents the operating liquidity available to businesses and ensures that it is able to continue its operations while satisfying its short-term debt and operational expenses.

What are the three main supply chain strategies used by companies to improve their working capital (WC)?

  • Manage inventory more efficiently.
  • Reduce Days Sales Outstanding (DSO) and payment terms from customers.
  • Increase Days Payable Outstanding (DPO) by paying suppliers on later terms.

The more working capital a firm manages to free up, the more it can support operational activities. The strategic management of liquidity, cash, and working capital are essential to the survival and growth of any company.

Financing working capital as a way to improve your business

Addendum’s finance solution focuses on two key levers to improve your working capital, thus generating cash flow for your business:

Supply Chain Finance allows buying organizations to optimize their payment terms to suppliers and improve working capital. At the same time, it gives the option to suppliers to receive early payment based on attractive financing rates.

Selective Receivables Finance allows your company to generate cash flow by selling your invoices for early payment well before the actual due date of the invoice. The accounts receivable financing is without recourse. By using our solutions, companies from various industries and countries are able to sell their invoices and get paid immediately.

 

Do you want to learn more?

Check out supply chain finance’s advantages for buyers and suppliers. To obtain more information, please contact us today. Addendum is an independent, external PrimeRevenue partner.

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