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Working Capital And Supply Chain Finance, The Perfect Partnership

Working capital determines a company's financial stability and, to some extent, its ultimate growth curve. It is the gap between what the corporation has and what it owes, to put it simply. The pandemic has unnecessarily stretched working capital, causing liquidity problems for many enterprises. Today's businesses prioritize working capital optimization above all else, which was brought on by the disruption of the supply chain caused by the current economic unrest.

The easiest method for analyzing a company's working capital is to compare its assets and liabilities. The assets could include cash, receivables, raw material and shipping products inventories, and completed items. Accounts payable, loans, abandoned inventory, and other loans could all be considered liabilities at the same time.

Without affecting the debt arrangements of either the buyers or the suppliers, supply chain finance enables purchasers to give their suppliers access to much-needed working capital.

Supply chain finance from Skyscend offers buyers to submit authorized invoices from collaborating suppliers to a lender, and the bank, depending on the buyer's strong credit rating, may be able to pay the supplier early at a discount. The bank doesn't get paid until the invoice's due date, and the buyer can get prolonged options from the supplier in exchange for financing at advantageous rates.

Working Capital Management

The goal of working capital optimization is to boost your company's productivity and profitability. When it comes to working capital optimization, we adopt an operationally focused strategy. To achieve long-lasting outcomes, we always rely our solutions on thorough data processing and work closely with our partners during implementation. We have a proven track record and have assisted countless businesses from a variety of industries in achieving their objectives.

Our method

We work together with our clients to take advantage of the unrealized financial potential of their operational working capital. It is done by streamlining the supply chain, supplier interactions, and consumer interactions. With extensive knowledge and experience in working capital optimization, we boost productivity gains and value capture.

Supply Chain Improvement

A pragmatic strategy can be used to address the constant balancing act between shifting client demand, working capital optimization, and cost-effective operations. A strong supply chain gives your business the support it needs to pursue growth, make the best use of limited resources, and stay responsive in a fast-paced environment. We assist you in discovering workable solutions to the tricky equation of supply chain optimization so that your business can use it as a competitive advantage.

The popularity of SCF across many industries

While the commerce and automobile sectors were the primary early users of supply chain finance, the concept is increasingly spreading to other industries like manufacturing, electronics, food and beverage, medicines, transportation, industrial loads, and others.

Additionally, huge corporate purchasers are no longer the only ones driving supply chain finance. Intermediate companies also have solid reasons to think about the strategy because the vast majority of commerce today is handled on open account terms and because businesses of all sizes are focusing on working capital indicators.

The Game-Changer in Working Capital Management through Supply Chain Finance

Utilizing cutting-edge technology, supply chain finance benefits the entire ecosystem. It eliminates the disparity in payment terms between the buyer and the supplier, easing the burden on working capital.

Returning to the manufacturing sector, supply chain finance solutions like invoice discounting and SCF from Skyscend enable manufacturers to pay pending supplier invoices more quickly and prolong the terms of payment for better working capital management. In turn, the suppliers get prompt payments, allowing them to deliver better and faster services. The working capital of every industry participant can be increased by applying this strategy, and the "about-to-crash ecosystem" can return to safety and resume its peak performance.

Final Thought

The intrinsic working capital that supply chain finance produces can be utilized by businesses for a variety of things, such as financing capital improvements, participating in stock repurchase plans or dividend buyouts, lowering debt, and lowering the cost of goods sold.

Typically, buyers are the ones that lead supply chain finance initiatives, and they gain a number of advantages at no actual cost to them. By receiving an early payment discount from the bank, suppliers contribute to the programs. But they don't have to use their credit lines; instead, they get much-needed, frequently cheaper financing, which might be a win-win situation. We at Skyscend offer various solutions like SCF, AP automation, invoice automation, working caption solutions, etc. Book a Demo now to know more.


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