Working capital is the amount of money a company has available to fund its day-to-day operations. It is calculated by subtracting a company's current liabilities from its current assets. Companies need to maintain sufficient working capital to ensure that they have the resources they need to meet their short-term obligations and operate efficiently.
There are several factors that can determine a company's working capital requirements, including:
- Sales volume and growth: Companies with higher sales volumes and rates of growth tend to have higher working capital requirements, as they need to invest in additional inventory and other assets to support their operations.
- Industry and business model: Different industries and business models have different working capital requirements. For example, companies with a long sales cycle (such as construction firms) may have higher working capital requirements than companies with a short sales cycle (such as retailers).
- Payment terms with suppliers and customers: Companies that have longer payment terms with their suppliers (i.e., they have more time to pay their bills) may have lower working capital requirements, while companies with shorter payment terms may need to maintain higher levels of working capital to meet their obligations. Similarly, companies that offer longer payment terms to their customers may need to maintain higher levels of working capital to cover the gap between when they make a sale and when they receive payment.
- Seasonal fluctuations in demand: Companies that experience seasonal fluctuations in demand may need to maintain higher levels of working capital to cover the periods of peak demand.
Overall, determining a company's working capital requirements involves considering a range of factors related to the company's operations, industry, and business model. By understanding and managing these factors effectively, companies can ensure that they have the resources they need to meet their short-term obligations and operate efficiently.
- The company 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.