Optimize Your Working Capital

January 23, 2013 Bhaji Illuminati

light-bulb-moneyDays Sales Outstanding (DSO) 

+ Days Inventory Outstanding (DIO) 

- Days Payable Outstanding (DPO) 

= Cash Conversion Cycle (CCC)

Recognize that big, ugly formula? It may just be the most important indicator in optimization, and a true measure of liquidity risk.

It seems a natural progression that to optimize the financial supply chain, a large organization would extend payment terms with suppliers. However, currently suppliers are having a difficult time gaining and maintaining access to third party financing and factoring is an expensive, time-consuming burden. So trying to reduce CCC by extending DPO has a huge (negative) effect on your suppliers working capital.

There needs to be a solution where both the buyer and supplier get what they want.

There is, it's called Dynamic discounting, and it represents a true win-win.

  • You get better returns on your working capital and have a healthier supply chain
  • Suppliers have fast, easy access to much needed cash

It sounds too good to be true, so I understand that you want to see it to believe it.

No problem, just sign up for Taulia's biweekly (no-nonsense) product tours and ask for more information on dynamic discounting - http://www.taulia.com/resources/product-tours

Previous Article
Dynamic Discounting for Dummies [Infographic]
Dynamic Discounting for Dummies [Infographic]

If you didn't see the value in dynamic discounting before, I'm sure this...

Next Article
Suppliers Love Taulia

Face it... What's not to love? December was Supplier Appreciation month here...