The working capital
Let's talk about the Working Capital Requirement (WCR) which includes Credit Management stakes.What is the Working Capital Requirement ?Working Capital Requirement is the amount of money needed to finance the gap between disbursements (payments to suppliers) and receipts (payments from customers). |
![]() |
Almost every company must incur expenses before obtaining the fruits of his labor (the payment of customer invoices). The nature of these costs depends on the activity. For example, if the business activity consists to buy and resell goods, it will require to purchase a stock of goods before selling. If it's an industry, it is necessary to buy the raw material before transforming it and then sell the finished product. This operating cycle must be financed because it is necessary in most cases to pay suppliers before being paid. The working capital requirement represents the amount necessary to finance this delay. |
![]() |
The financial resources of businesses are always limited. It is therefore desirable to minimize the Working Capital Requirement:
![]() ![]()
The WCR today !At a time when margins are getting lower because of the increase of raw materials cost and an increasingly tense competition, where external financing (bank, investors) is less and less accessible, companies are obliged to find other means to finance their activities.This concerns especially companies whose equity level is low, which is the case with many of them, particularly in France where the under-capitalization of companies is chronic. The most obvious answer to this permanently stronger tension imposed by the outside world is to optimize the use of financial resources available internally to the company, through a precise and efficient management. How to do that ? By reducing the WCR! This allows to improve cash and to use the financial resources available of the company for truly useful means: investment, development ... etc., instead of immobilizing them in areas that are inert like trade receivables and inventories. |
Next step : Normative working capital →
Tools download:
Excel tool which allows to calculate the normative WCR and to determine what will be the WCR with the evolution of the turnover of your company.
WCR calculation tool based on a monthly basis in order to highlight where gains in WCR can be achieved.
WCR is piloted in days of sales for a better performance analysis.
WCR is piloted in days of sales for a better performance analysis.
Includes 4 management tools about working capital which allow to calculate the working capital requirement and to manage it:
- Normative WCR calculation,
- WCR calculation and management,
- DSO calculation,
- DPO calculation
DPO calculation tool which allow to manage the DPO which is a key indicator for working capital performance.
DSO calculation tool which allow to manage the accounts receivable performance from a cash and working capital standpoint.
This tool allows to calculate several discount rates based on cost of funding of your business and on the commercial context:
- Standard offer.
- Cash offer.
- Risk offer.
tools to download
Online tools
Subscribe
Not yet registered? The subscription allows downloading and unlimited use of all files of Credit Management tools.
Blog
All news about collection and credit management
How to calculate the Payment profiles of your customers?
My DSO Manager crosses the € 60 billion mark of receivables managed over 12 months
Evolution of My DSO Manager graphics!
Is the DSO a key performance indicator?
Why do these companies trust My DSO Manager to manage their cash collection?
Words of experts
Find the latest articles of collections and credit management specialists
How crisis show how people and companies are?
The credit management facing a shock wave
The payment profile, a major advantage for an efficient management of your Accounts Receivable
User reviews


Social networks
Find Credit Management tools on your favorite social networks
Comment this page