One thing is true in every business – If you don’t have enough cash flow to run your daily operations and meet short-term goals, your business might face many unexpected challenges.
Ever known someone who started a large project, and realised there’s short of funds to keep the business running? Don’t fall into that situation.
Learn the best way to autopilot your working capital.
Working capital. What is it?
Working capital is the number of liquid assets to pay for the planned and unexpected expenses to meet the short-term obligations. Unusually complex! Right?
In simple words, it’s the cash on hand to pay the bills, payroll and other expenses. Your business’ working capital is the difference between current assets and current liabilities or debts.
As a formula, it would look like: Working capital = Current assets – Current Liabilities
How do unsold inventories reduce working capital?
For steady growth, businesses need enough inventories to meet the customers’ demand. And it also needs enough working capital to continue the daily operations. It is closely linked with the inventory flow. If you’ve unsold inventory, slow-selling stock or outstanding invoices, it will reduce the amount of available cash you have on-hand – making it difficult to invest in short-term goals.
To tackle this difficult situation, you can get instant working capital on POS or Credit Card without collateral. This will help you manage your inventory issue until you’re able to sell your slower-moving items.
Never share the ownership of your business
Many micro and small business owners think that the only way for expansion is by seeking outside investors and compromising the ownership. They don’t realise that giving up a portion of the business will handicap their decision-making power on business operations.
It’s advisable to exclude investors and invest in your own business.
Avoid impulsive trading decisions
At times entrepreneurs get aggressive about their business growth. You might want to slow down at this point to avoid overtrading! Overtrading happens when businesses promise customers more than they can deliver or when they buy in more inventory without considering the sales outflow. Avoid engaging in more business than what is supported by resources, market or funding available. While overtrading is good for business growth, it can get your business into the ground by freezing the core activities.
If you ever end up overtrading, you can minimise its effect by backing up yourself with a working capital loan.
Use working capital to solve immediate issues
Sudden financial needs, like short-term obligations or inventory issues, can freeze your business operations. Working capital can help you with crucial problems you encounter in your business, like short-term or immediate financing needs. If you foresee risk or fall in an unexpected financial difficulty, you can easily sail out of this problem by getting instant POS or Credit Card based finance.
Maintaining enough working capital is often the most challenging task for a business owner. If managed well, it can help your business to stay ahead and keep growing throughout the year. It’s a struggle to keep paying the normal inventory charges and payroll when sales are down. But you ever fall in these situations, POS or Credit-based loans are the best boost for your business to get you back on momentum. Just make sure to borrow only what is needed, and when you need it.