WAYS OF REDUCING WORKING CAPITAL CYCLE AND ASSOCIATED DIFFICULTIES
1-Reducing the levels of inventory held. However, inventory re-order cost will rise, and sales and customers may be lost.
2-Reducing the debtors collection period. Difficulties: May result in lost sales and customers (if credit is tightened).
3-Delaying payments to trade creditors. Difficulties: May lead to loss of early settlement discounts and credit facility.