How to Keep Your Working Capital in Good Standing

For many companies, the health of the organization’s operational and financial standing can be determined by its working capital. A healthy capital that is in good standing will help your company be prepared to develop growth opportunities and overcome any obstacles you may encounter. There are many ways you can ensure that your capital is steady and healthy.

Develop Great Supplier Relationships

Payroll, rent and utilities can make it difficult to pay your suppliers first. But having current accounts can allow you the social capital necessary to obtain better deals. It can also become difficult to fill your orders if your goods are delayed because of a sour relationship with suppliers. Paying your suppliers on time or early has the potential to earn you discounts or access to bulk supply ordering. Eventually, these relationships could lead to exclusive rights to brands and products, keeping costs low and increasing revenue and market share. Developing a strong relationship can improve your cash flow.

Finding Cash Quickly

Sometimes you have to improve your working capital in a short amount of time. Many businesses have several options to help them find money quickly and improve their cash flow. One of these is selling long-term assets like products, equipment and supplies. If these material goods are no longer needed, these unused assets have the potential to become cash in hand. Clients and suppliers can be considered when looking for people or businesses to purchase these goods.

Short term debts are another place businesses can find quick cash. Many businesses are willing to reduce bottom-line amounts of debt if the orders are paid quickly or in one lump sum. This has the potential to improve finance books and cash flow for many businesses.

Consider Alternative Financing Options

The current lending environment can make it difficult for small businesses to receive traditional financing. This can strain the working capital of businesses for a variety of reasons. Many entrepreneurs are looking to alternative financing options, including advances and options offered by venture capitalists, to obtain the liquidity necessary to keep their business healthy.

The health of your business, your ability to take advantage of expansion opportunities when they present themselves, and the capability of your business to remain healthy when facing obstacles all depend on healthy working capital. Small and medium sized business face a variety of challenges keeping this capital in good standing. The above methods are only some of the tools available to overcome those difficulties.