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19.1 What Is Working Capital?

Goal of Working Capital Management

Components of Working Capital Management

The Cash Cycle

Working Capital Needs by Industry

19.2 What Is Trade Credit?

How Trade Credit Works

Trade Credit Terms

Cost of Trade Credit

19.3 Cash Management

Cash Holdings

Motivations for Holding Cash

Cash Alternatives

19.4 Receivables Management

Determining the Credit Policy

Establishing Credit Terms

Monitoring Accounts Receivables

19.5 Inventory Management

Inventory Cost

Benefit of Holding Inventory

19.6 Using Excel to Create the Short-Term Plan

Sample One-Year (Annual) Operating Budget

Sample Cash Budget

Welcome to "Trade Credit and Working Capital in Financial Planning," a comprehensive course designed to equip you with the essential skills needed to manage a company's short-term financial health. Working capital is the lifeblood of any business, and understanding how to optimize it is crucial for sustainable growth, operational efficiency, and long-term success.

Welcome to "Trade Credit and Working Capital in Financial Planning," a comprehensive course designed to equip you with the essential skills needed to manage a company's short-term financial health. Working capital is the lifeblood of any business, and understanding how to optimize it is crucial for sustainable growth, operational efficiency, and long-term success. In this course, you will dive deep into the core components of working capital management, exploring the intricacies of the cash cycle and analyzing the unique working capital needs across different industries.

Throughout the modules, we will demystify trade credit, teaching you exactly how it works, the standard terms involved, and how to accurately calculate its true cost to your business. Furthermore, you will master cash management strategies, learning the underlying motivations for holding cash and exploring viable cash alternatives to maximize returns. The course also covers critical aspects of receivables and inventory management, guiding you on how to determine effective credit policies, establish profitable credit terms, and balance the costs and benefits of holding inventory.

Finally, you will put theory into practice by using Microsoft Excel to create robust short-term financial plans, including sample one-year operating budgets and cash budgets. Whether you are a finance professional looking to sharpen your analytical skills or a business owner aiming to improve your company's liquidity, this course provides the practical knowledge and tools you need to succeed in modern financial planning.

Trade Credit and Working Capital in Financial Planning

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            <p>Effective financial planning requires a deep understanding of working capital, which represents the difference between a company's current assets and current liabilities. This course explores the fundamental goals of working capital management, emphasizing how businesses maintain liquidity while maximizing operational efficiency. By examining the cash cycle and the varying needs across different industries, participants will learn how to balance short-term resources to ensure that a firm can meet its upcoming obligations and invest in growth opportunities.</p>

<p>Central to this exploration is the role of trade credit and the strategic management of various current assets. The curriculum delves into the mechanics of trade credit, including its terms and associated costs, as well as the critical processes involved in receivables and inventory management. You will learn how to establish robust credit policies, monitor accounts receivable, and evaluate the benefits and costs of holding inventory. These elements are vital for optimizing the flow of funds and minimizing the financial risks associated with day-to-day operations.</p>

<p>To bridge the gap between theory and practice, the course concludes with a focus on short-term financial planning using modern tools. Through the application of Excel, learners will gain hands-on experience in creating annual operating budgets and detailed cash budgets. This practical approach ensures that the concepts of cash management and liquidity are not just understood in the abstract but can be effectively implemented to forecast financial needs and secure the long-term stability of an organization.</p>
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