Taking the right steps to improve your company’s working capital position
Excel on your working capital management to have a real competitive advantage!
Uncertainties in the economy and financial markets are placing unprecedented pressures on many businesses around the world and their supply chains. Now, more than ever, is the time to focus on maximizing liquidity and free cash flow. Effectively make use of your current assets and maintain sufficient cash flow to meet short-term goals and obligations with efficient working capital management.
What is a Working Capital?
Working capital is a loan that is taken to finance a company’s everyday operations.
Working capital finance is business finance designed to boost the working capital available to a business. It’s often used for specific growth projects, such as taking on a bigger contract or investing in a new market.
Working capital formula:
Current assets / Current liabilities = Working capital ratio
Why you need working capital:
- Your business may need extra funds to adjust for a busy season or to keep the business operating when there’s lesser profit.
- This can be used to fund obligations to suppliers, employees, and the government while waiting for customers’ payments.
- Extra working capital can help improve your business, such as taking advantage of supplier discounts by purchasing in bulk.
- You can use this to pay for temporary employees or to cover other project-related expenses.
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