Understanding WCR and its impact on SME financing

WCR is the difference between current assets (such as inventories and trade receivables) and current liabilities (mainly trade payables). In other words, it’s the money tied up in the company’s operating cycle. A positive WCR means that the company must find resources to finance its current activity, while a negative WCR indicates that the company has a cash surplus generated by its operations.

For SMEs, effective management of working capital requirements is crucial. Poorly managed working capital can lead to cash flow problems, limiting the company’s ability to meet short-term commitments, invest in its development or seize new opportunities.

Factors influencing WCR

Several factors can have an impact on a Swiss company’s WCR:

1. Inventory management policy: excessive stockpiling ties up funds.
2. Payment terms granted to customers: the longer the payment terms, the higher the WCR.
3. Payment terms obtained from suppliers: the shorter they are, the greater the WCR.
4. Seasonality of activity: certain sectors experience peaks in activity requiring more funds.
5. Company growth: rapid expansion can significantly increase WCR.

Financing options for working capital

To finance their working capital requirements (WCR), SMEs have a range of different solutions at their disposal. It can be complex for SMEs to navigate through the options of bank credit, leasing, factoring, participatory financing or alternative financing. Each solution has its advantages and disadvantages, which we summarize below:

1. Self-financing: using the company’s retained earnings. This method is limited by the company’s ability to generate profits, and can slow down growth.
2. Traditional bank credit: obtaining a loan from a traditional bank. Although common, this process can be lengthy and require substantial collateral.
3. Factoring: assign your trade receivables to a factor who advances the funds. This can be quickly set up and combined with other types of financing.
4. Supplier credit: negotiate longer payment terms with suppliers. This option depends on the relationship with suppliers and their own financial situation.
5. Alternative financing solutions: platforms like Kredo offer innovative and flexible solutions for financing working capital.

Kredo: an innovative financing solution for Swiss companies

Kredo is positioned as a modern alternative to traditional working capital financing methods for Swiss SMEs. Financing via Kredo offers several advantages:

1. Speed: thanks to a digitized process, and financing secured upstream by Kredo Debt Fund I, companies can obtain financing much faster than with traditional methods. It takes around 1 week to obtain financing with Kredo.
2. Flexibility: Kredo offers financing solutions tailored to the specific needs of each company.
3. Accessibility: the platform is aimed at SMEs with an established business model and at least two full financial years, offering a solution for many companies.
4. A human, non-standardized approach: Kredo will analyze your company in detail, taking into account the particularities of your business or its activity. Each investment project is also challenged in the process.
5. Security: Kredo focuses on data protection and transaction security, reassuring companies that their financial information remains confidential.
6. Matchmaking: the platform connects SMEs in need of financing with investors interested in financing Swiss companies, creating a beneficial ecosystem for the local economy.

By using a solution like Kredo, SMEs can quickly and simply optimize their WCR management, maintain a healthy cash flow and seize growth opportunities without being held back by short-term financing constraints.

Conclusion

Effective management of working capital is a key factor in the financial health of SMEs. With the emergence of innovative solutions such as Kredo, Swiss companies now have fast, flexible alternatives for financing their working capital. These new options enable SMEs to better navigate a constantly changing economic environment, ensuring their long-term survival and growth.

L’article Working capital: a crucial issue for Swiss SMEs est apparu en premier sur Kredo.

It’s precisely to overcome these shortcomings that we created Kredo. Our mission is to revolutionize the way Swiss SMEs finance themselves and interact with their financial partners. We’ve rethought the credit process from A to Z to simplify it as much as possible and automate low-value-added tasks using cutting-edge technological solutions. This enables us to focus on our core business: providing Swiss SMEs with fast, flexible solutions, and providing expert advice to entrepreneurs in Switzerland.

Let’s take a closer look at how Kredo will revolutionize the financing model for Swiss SMEs.

Kredo’s revolutionary approach

Starting from a blank page, Kredo has rethought every necessary step of the credit granting process in order to optimize each and every one of them. By constantly keeping the SME’s interests at the forefront, we have succeeded in creating a simple procedure that can be summed up in a few points:

1. Simplified online application

When you visit Kredo’s financing platform, applying for credit is done entirely online. The intuitive interface guides the entrepreneur through each step, making the process clearer and less intimidating. An indicative offer can be submitted after the first 4 steps, and in less than 5 minutes.

2. Streamlined documentation

Once you’ve created your account and reviewed the indicative offer, it’s time to finalize your application. Kredo has optimized the list of documents required, concentrating on the essentials. For example, you will need to provide us with the bank details of the account to which we will transfer the funds, the details of the controlling shareholders, the financial statements and a debt register (template provided online). This second step should take you no more than 15 minutes, and that’s it, your part of the work is already done! Once the application has been finalized and submitted, Kredo takes over!

3. Fast, transparent analysis

Our IT platform uses advanced technologies to automate a number of tasks, enabling us to save precious analysis time and provide rapid feedback to the SME. Our process is transparent, with regular updates on the status of the request.

4. Company visit (by real people!)

Digitization plays an important role in the early stages of our process. However, we are convinced that a credit application is first and foremost a relationship of trust between human beings. Once we’ve completed our initial analysis, we’ll set up an appointment to visit the company. To do this, Kredo relies on experienced client advisors who will clarify with you the last missing elements in the understanding of your project, and provide you with valuable advice and challenge your project always in a benevolent manner.

5. Quick decision

Once the company visit is complete, the advisor submits his report to the analyst, who finalizes the application. A decision is then taken by the Kredo Investment Committee. We are committed to providing an extremely rapid response, often within just a few days of your application. Whether the answer is positive or negative, we’ll take the time to provide you with feedback on the reasons behind our decision, and suggest the various solutions available to you, whether through Kredo or another channel.

6. Flexible offers

As soon as your application has been approved by the investment committee, we will propose a tailored financing package to meet the specific needs of your SME.

7.Funds made available quickly

Once you’ve approved our offer, all that’s left to do is sign the formalities – a process that has also been digitized and takes less than 5 minutes. Once the administrative details are out of the way, the funds can be made available extremely quickly. Kredo is backed by its financing arm, an investment fund dedicated exclusively to financing Swiss SMEs. This means that the financing of your SME is secured even before you submit your loan application, enabling us to react quickly.

Conclusion

The process of applying for financing can be a daunting one, but Kredo offers a refreshingly innovative alternative. By combining cutting-edge technology, a user-centered approach and a human touch, Kredo is transforming the financing experience for Swiss SMEs. This innovative approach not only speeds up access to finance, but also gives entrepreneurs back control over their growth, enabling them to focus on what really matters: developing their business.

L’article Financing your SME in Switzerland <br>– an insurmountable and daunting process <br>– really? est apparu en premier sur Kredo.