Stretching out Payments to Suppliers
In the world of business today, Cash, more than anytime else in the history, is the King. The state of flux of demand, the uncertainty of economy & it's performance, increased stress on asset utilization & risks associated with global trade have resulted in an increased stress on the Supply Chain. It looks logical that the largest cost contributor to the organizational costs will have to lead the initiative to preserve 'Cash'. The improved Cash flow i.e. Working Capital Cycle naturally improves the position of your company where now you need to borrow less money, return some cash to shareholders etc. The Cash Flow Cycle of a business is pretty straight forward - you have accounts receivables (money that is to come into the business), accounts payable (money that you owe) & Inventory (money locked in the system). It is fairly obvious that the Cash is easy to be released into the business if the company works on reducing the days receivables outstanding ...