Lawrence Sports Working Capital Policy

Paper Summary:

This paper discusses a working capital policy and its aims for a company. Specifically, the paper discusses the case of Lawrence Sports and the critical financial situation they find themselves in, which calls for a revamp of the working capital policy for the company. The paper also discusses how a sound policy will allow Lawrence Sports to not only meet its short-term financial obligations, but also to take advantage of potential long-term opportunities as well.

Table of Contents:
Abstract
Working Capital Policy
Cash Requirement
Credit
Supplier Negotiation
Short Term Financing
Metrics
Ethical Implications
Conclusion

From the Paper:

"For instance, changes in the cash balance requirements include establishing a reserve fund for emergencies, and shifting away from a monthly cash budget to a weekly cash budget. Changes in credit management involve speeding up the collection of receivables, negotiating better prices of goods, and initiating better inventory-management practices. Changes in the supplier negotiation component of the policy include establishing bilateral terms of payables and receivables and initiating a goods-inspection procedure. Changes in short term financing aims to move the company away from bank-borrowing to securitization. In a change of pace, Lawrence Sports will engage the money market forum by issuing commercial paper and medium-term notes. Lastly, the policy will be heavily scrutinized by changes made to the metrics component; which includes the establishment of a quality-assurance program and the sharing of financial records among the key business partners."

Sample of Sources Used:

• Barret, G. (1993). How small CPA firs manage their cash. Journal of Accountancy, 176(2),56. Retrieved August 17, 2008, from ProQuest database.
• Blanchard, D. (2007). How to sustain successful supplier/buyer partnerships. Retrieved August 17, 2008 from http://www.industryweek.com/ReadArticle.aspx?ArticleID=15341
• Carbone, J. (2007). How to negotiate with suppliers. Purchasing, 136 (12),48. Retrieved August 17, 2008, from ProQuest database.
• Cotis, L. Leverage data and resources for improved financial performance. Business Credit, 107(9),39. Retrieved August 17, 2007 from ProQuest database.
• Harmetz, Lloyd. (2008). Medium-Term Note Programs. Retrieved August 10, 2008, from RR Donnelley: Real Corporate Lawyer Web site: http: http://www.realcorporatelawyer.com/faqs/faqmtn.html

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