Working capital management refers to the management of a company's short-term financial resources, including its cash, inventory, and accounts receivable. A key aspect of working capital management is managing the company's account receivables, or the money that is owed to the company by its customers for goods or services that have been delivered but not yet paid for.
There are a few different ways that a company can manage its account receivables exposure, which is the risk that a customer will not pay their bill on time or at all. Here are a few strategies that a company might use:
- Offer credit terms: A company can offer credit terms to its customers, which allows them to pay for their purchases at a later date. This can be a good way to attract customers, but it also means that the company is taking on some risk that the customer may not pay their bill on time.
- Monitor creditworthiness: A company can also monitor the creditworthiness of its customers to try to reduce its account receivables exposure. This might involve running credit checks on potential customers before offering them credit terms, or requiring customers with poor credit to pay upfront or to provide collateral in exchange for credit.
- Set payment terms: A company can also set payment terms that are favorable to the company, such as requiring payment within a certain number of days of the invoice date. This can help to reduce the company's account receivables exposure by encouraging customers to pay their bills on time.
- Use credit insurance: A company can also purchase credit insurance, which can protect the company against losses if a customer fails to pay their bill.
By effectively managing its account receivables exposure, a company can reduce the risk of not being paid on time, which can help to improve its cash flow and overall financial health.
Company perspective
- 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.