Optimizing Working Capital Management for Small and Medium-Sized Enterprises from a Supply Chain Perspective

This paper studies working capital management for small and medium-sized enterprises (SMEs) based on a supply chain perspective and takes Company A, a manufacturer of automotive exhaust aftertreatment substrates, as a practical example. By means of reading and analyzing related literature, the relationship between supply chain collaboration and the operation of working capital will be examined. Concerning procurement, production, and sales, it studies how the supplier's payment terms, the discipline of customers' credit, and the practice of lean inventory, reshape the accounts receivable, inventory, and accounts payable. The company improves capital turnover through order production and an integrated information system but due to limited bargaining power and reliance on a single market they transitioned from profit to continuous loss over three years. This shows that the actual benefit of a coordinated supply chain greatly relies on a company's negotiation standing and stability of the market. The study contributes by expanding on working capital management in the context of supply chain synergy, it has distilled the three paths of "longer payables periods, tighter credit, faster rotation of inventory",and provides some micro-evidence supporting payment-term transparency, sharing of credit data and innovation of supply chain finance. Core competitiveness needs strengthening as well as strategic diversification, and improving supply chain collaboration in order to keep a good capital flow.