How does this work in detail?

Inventory optimization

Current process

 The supplier delivers the ordered goods to the company’s warehouse. At the time of production the goods are called off. The company pays the supplier on the due date (usually between 30 to 60 days after delivery).

New process

The supplier delivers the ordered goods to jtw’s warehouse (normally a segregated part of the company’s warehouse). At the time of production the company calls the goods that will be transferred to the company. jtw pays the supplier within the agreed discount period. The companyb ays jtw at the due date (extension up to 120 days and more possible).

How does the inventory optimization work:

  • before
  • after
Shortening of
the balance sheet

The goods are taken on the balance sheet of jtw at the time of delivery by the supplier. This reduces the company’s balance sheet by the value of the goods for the time of storage.

Off-balance sheet
warehousing

By using jtw´s SPV as a sales agent for the company the warehousing of the company is in the broadest sense off the balance sheet of the company.

Strengthening of
the liquidity

jtw agrees on a payment term with the company that is significantly longer than the one agreed with the supplier. The longer payment term and the later invoicing (after delivery of goods to the company) shortens the cash-2-cash cycle (C2C), which increases liquidity of the company.

Improvement of the
inventory management

Off balance sheet warehousing allows the company to expand the inventories in times of potential shortages, favorable market conditions or delivery difficulties without burdening the balance sheet.

Optimization of the
balance sheet ratios

The reduction in inventories in conjunction with the expansion of payment terms improves the key figures DIO, DPO and C2C as well as the debt ratio.

Improvement of
the credit rating

The optimized balance sheet ratios have an impact on the credit rating of the company. In medium term the company´s rating will improve.

sales optimization
working capital optimization

jtw.finance GmbH
Maximilianstraße 2
80539 München
Germany

Tel +49 (0)89 20 500 85 637
Fax +49 (0)89 20 500 81 50
[email protected]