Posts in Working Capital category.
Cash is king in business because it allows you to cover expenses without minimizing investments or skimping on production standards. That’s why any business should track two metrics at all times: working capital and cash flow. While these two might seem similar, their purposes and impact on a business are different. For example, cash flow […]
Budget management is arguably the most difficult aspect of running a business because of how multi-faceted it is. On one side, you track the funds being spent on generating revenue, i.e., inventory, machines, and staff, among others. At the same time, you monitor whether the incoming revenue is giving enough return on investment. But in […]
Working capital gives a business leverage to decide what it wants to do next. When there is enough in the bank after paying for the basics, you can make it work for your future. For example, a business generating good revenue without feeling depleted in between can switch things up more easily. It can move […]
Your cash flow might look healthy on paper, but money might not necessarily be available when you need it. That’s because with business comes 100s of expenses that get cleared on their own timelines. Sometimes you’re owed a significant sum, yet it doesn’t show in your bank account because the customer hasn’t paid. Hence, a […]
Borrowing money might actually be easier than knowing how much you actually need to borrow. Take too little, and you find yourself facing another cash shortfall just weeks later. Take too much, and you could end up paying interest on funds your business never needed. That is why assessing your working capital needs should come […]
Working capital measures your short-term financial position, while cash flow tracks how money moves in and out of your business. Hence, a business can have plenty of working capital and still struggle to pay its bills on time. It can also have strong cash flow while carrying very little working capital. Understanding the ins and […]
Do you know it’s possible for a business to run out of cash despite being highly profitable? A sale does not always mean cash in the bank. Your business may make a sale today, pay its supplier weeks earlier, and wait another 30, 60, or even 90 days to collect from the customer. This gap […]
An efficient business model runs the long race and can even turn the odds in its favor. When the owner thoroughly plans how to use business capital to reap the maximum benefits, profitability comes easily. Among many metrics that determine a business’s efficiency at any given time, working capital turnover is a big one. It […]
Running a business comes with 100s of expenses, some of which might not even be properly accounted for. If you let small things slip without proper tracking, they can incur a significant gap in your freely available working capital and eventually limit your growth. Therefore, understanding the changes in your working capital and carefully tracing […]
Easily accessible cash to support operations is essential for a successful business. If there isn’t enough in the account, any business can have a hard time keeping the lights on. Therefore, you aim to maintain a healthy working capital at all times so there is no scrambling for basic tasks. But when this capital drops […]
