Keeping a pile of working capital is always a hard job as if you are the boss of a medium grade company, it’s hard. Real hard! Sometimes there can be situations of shutting down the entire business as there are not enough funds to keep the workup. Your working capital can be a good friend to help you at such points, since keeping the working capital tight and flexible is nothing less than a fortune. So, how can a working capital help your business?
There are a lot of ways that working capital can do a lot for your business. And it still won’t complain to you back for not doing this or that. The primary job of working capital is to handle all the small payments and debts of business on a daily basis. Breaking down bigger checks for these is not a good option. Not at all!
Running out of working capital is easy, as it always keeps on spending money on this or that. A clear trick to employ is to keep aside some of the cash of the working capital aside and use that for the underlying expenses. In this way, you won’t ever run out of working capital, as it’s not the only one.
Keeping a backup of the capital is the most viable option:
Working capital also tells a lot of things about your business both to your competitors and to you too. About, how much you are capable of handling the business, how much capital (approximately) do you have and how much of it is being used up properly. A clear sight of the loss of working capital can be a loss of wealth, the raw wealth of a company. Keeping an eye on it should be your priority option with no negligence. Since accounts, inventory, investments, marketing costs, finances and debts along with employee salaries are to be taken from the working capital.
Working capital drives the business, so make sure you have a lot of it:
One important place where you can lessen your finances and the overall working capital too is marketing and advertising. Since there are several ways where you can optimize your prior costs related to over marketing and spend some less money. Working capital can be inflated up right from the roots, by lessening the expenses that require less focus.
As already mentioned, keeping a portion of the working capital can be helpful. As expenses like debts, checks, payments in small time, fines and liabilities can be paid with ease from spare working capital. This usually keeps the main capital safe, to keep your business running.
Last, but a real trick to keeping the working capital running, is to check for discounts for the raw materials that you buy. Getting eligible for discounts can be a better deal breaker for you to save money, directly on to the working capital. Many companies buy in bulk for later uses too; you can even try out the same to save expenses. While being an old trick, it is highly applicable and can help you save your company at hard times without going flushed out of working capital. For more information about Working Capital you can follow the pioneers like Brian Paes Braga and others. Canada based entrepreneur Brian Paes-Braga serves as a Partner and Managing Director at Fiore Group, a leading merchant bank which builds, invests, finances and advises firms in the natural resource, technology, food and beverage and entertainment sectors.