There are several strategies that small and medium-sized enterprises (SMEs) can use to optimize their working capital:
- Review and optimize accounts receivable: SMEs can improve their cash flow by reducing the time it takes to collect payments from customers. This can be done by implementing a more efficient billing and collection process, offering incentives for prompt payment, and negotiating longer payment terms with customers.
- Manage inventory effectively: Maintaining an optimal level of inventory can help to reduce carrying costs and improve cash flow. SMEs can do this by implementing just-in-time inventory management techniques, reducing excess and obsolete inventory, and negotiating favorable payment terms with suppliers.
- Optimize accounts payable: SMEs can improve their cash flow by reducing the time it takes to pay their own bills. This can be done by negotiating longer payment terms with suppliers, taking advantage of early payment discounts, and implementing a more efficient accounts payable process.
- Use financial instruments to manage working capital: SMEs can use financial instruments, such as factoring and supply chain financing, to improve their working capital management.
- Monitor working capital ratios: SMEs can use financial ratios, such as the current ratio and the quick ratio, to monitor their working capital and make adjustments as needed.
- Seek external financing: If a SME is unable to generate sufficient working capital through internal means, it may need to consider seeking external financing, such as a bank loan or a line of credit.
- SME will be able to optimize the asset site of its balance sheet, by
- Optimizing working capital using PRI® CrediSoft
- Monetizing open account receivables through PRI® inside
- And will be able to reduce funding costs
- As part of the trade-off between direct payment of invoices of creditors and payment discount optimizing the credit site of the balance sheet using PRI® Supply Chain
- And creditors will monetize the account receivables and in addition can optimize working capital using PRI® CrediSoft
Qube added value
- Qube Financing (and its affiliates) have developed the Qube platform, supported by its proprietary PRI® inside infrastructure, front-end to back-end fully automated receivables financing platform (“Qube Platform”), as one of the earlier Fintech 3.0 initiatives in the market and is fully equipped to be the winning platform of the third wave.
- This Qube Platform is fully operational and has been fully adopted by institutional investors, including the standardized procedures, ‘modus operandi’ and underwriting process steps & criteria.
- Qube targets European SME and Mid Market Corporates with a fully standardized approach as well as tailored solutions for multinationals, predefined underwriting criteria that are agreed with institutional investors and supported by PRI® inside and the add-on credit & collection management application PRI® CrediSoft and PRI® Supply Chain.
- Offering consolidated multi jurisdictions multi operating companies fully automated working capital financing solutions based on invoiced turnover, whereby PRI® inside directly interfaces with the Corporate's ERP systems, the Connection.
- The Qube Platform benefits from a modular design and standardized processes and legal infrastructure.
US version of PRI® infrastructure can be calibrated for US time zone and jurisdiction.