BCR Publishing
We are the leading provider of news, market intelligence, events and training for the global receivables finance industry.
Working with industry leading organisations, experts, governments and universities, BCR Publications delivers expertise in factoring, receivables and supply chain finance to a global audience.
BCR has long been a beacon of innovation and excellence in the realm of receivables finance, playing an instrumental role in shaping the industry’s international landscape. Through its comprehensive conferences, insightful publications, and thought leadership, BCR has facilitated crucial dialogues and connections among industry professionals, driving forward the development of receivables finance globally.
Follow BCR Publishing
Free passes
For corporate treasurer roles/functions!
Should SWIFT be afraid of blockchain technology?
How can Cash Management improve your Cash Conversion Cycle part III
| 07-10-2016 | Olivier Werlingshoff |
In my two previous articles I gave some examples of how cash management could improve the DSO and the DIO but, what about the DPO? The DPO is an efficiency ratio that measures the average number of days a company takes to pay its suppliers. The more days, the better your cash conversion cycle will be.
Extend payment terms
The first action that can be taken is to extend your payment terms. In the payments barometer from Atradius of 2016 you can find an overview of all payment terms and average DSO for all countries in Western Europe. The reasons why payments are delayed are also mentioned.
The average given payment term to B2B customers in The Netherlands is 27 days, the average DSO is 42 days! Most of the time the first action that is taken when companies have liquidity problems is to extend their payments. The negative aspects of this action can be major. The first aspect is the impact this action has on your supplier, because he has to wait to receive his money. He will then have to look for alternative borrow possibilities. Besides the negative relationships, the extra costs will probably be include in his next price. Suppliers can also decide only to send you the goods when paid in advance.
As you can read this action can have a boomerang effect.
Reverse factoring
A possibility to extend your payment term without all negative effects is to use reverse factoring. With reverse factoring you give the possibility to your supplier to receive more favorable financial terms than they would have otherwise received for a loan.
The effect could be that the relationship between you and the supplier can be improved and you still can extend your payments.
Single payment solution
Another solution is to decrease your banking transfer time of a payment. If you have a lot of foreign suppliers, transfer times can easily be extended, especially when you need to use correspondent banks.
Using banks with an international presence as well as a single payment solution will facilitate you to follow your payment and use the fastest transfer method. By doing so, you can delay the moment of payment and still pay on time.
Within the EU you can make direct payments as a SEPA payment, because there are no borders anymore for money transfers. You don’t need local accounts anymore to facilitate and accelerate your payments.
Olivier Werlingshoff
Owner of WERFIAD
Waarom is er weinig interesse voor Cash Management?
| 06-10-2016 | Maarten Verheul |
Voor de lange termijn zijn er vaak ook wel zaken te bedenken. Nog niet ingestuurde subsidie aanvragen en toch ook nog terug te ontvangen vennootschapsbelasting door middel van Carry Back, Buitenlandse BTW, oninbare BTW, Suppletie aangifte BTW.
Waarom besteden we meer tijd aan de Winst en Verliesrekening dan aan Cash? Kunt U morgen alle vervallen facturen betalen?
“Waarom besteedt slechts 10% van de bedrijven aandacht aan liquiditeitsprognose?” :
Mijn grootste hobby is Cash Management. In het verleden heb ik daar grote successen mee gehad en bedrijven mee gered. Ik heb de salarissen nooit één dag te laat betaald, omdat ik wist hoe de vlag van de Cash er voor stond. Als je weet hoe de vlag er voor staat, dan pas kun je keuzes maken. Als je het niet weet dan is er geen keuze meer. Of u stuurt de betalingen in naar de bank en de bank belt dat ze niet worden uitgevoerd. Dan wordt het pas echt gezellig, want de volgende dag belt de bank weer dat u bij Bijzonder Beheer van de bank komt.
De kern van het probleem is volgens mij dat Cash niet als sexy ervaren wordt. Het lijkt zo banaal en helemaal terug tot de elementen. Men zegt liever: “Ik ben business controller.”. Toch is de Cash-positie en -planning wel één van de meest elementaire zaken die binnen een onderneming goed geregeld moeten zijn.
[separator type=”” size=”” icon=””]
[button url=”https://www.treasuryxl.com/community/experts/maarten-verheul/” text=”View expert profile” size=”” type=”primary” icon=”” external=”1″]