Resolving Working Capital issues

Problems appear to be never-ending in their form! But, yes, we also believe that there can be no problems, without solutions; isn’t it! Every problem has its own solution, just that we need to dig in deeper and clearer.

For any business to thrive, we need to have the basics, the major part being the working capital. The first difficult part is to get the capital amount; which can be taken care by the bank loans, grants given by various committee and federal governments. Apart from that, we can also source the income from friends and family too.

After getting the working capital ready, the next set of problems is about managing that working capital efficiently to run your business. Its so impossible to run business, without any losses, so gearing up your mind and pocket to bear the losses and also having enough capital to arise against the losses and keep your work running, is the biggest challenge in itself.

Apart from all this, lies your performance. The way you shape up your business, with knowledge, hard work, any related experience, and skills; will determine your outcome, profits in the longer run. What if your working capital became too low? If y our business had too many outgoing bills than any incoming bills? How will you manage and balance between them?

There are many ways available to improve or manage your capital better. We all know that working capital is the money, apart from credit, expenses, and profits that are available to be invested for the welfare of the business. Here are few things that can help you balance your working capital better, even for a beginner.

Improve Payment Modes:

Yes, when the bills don’t arrive on time, your next set of capital is at stake. Once you have invested your money and are waiting for the bills from clients, if the bills don’t come on time, your business becomes low for the next set of deliverables. So, improve your payment mode for your clients.

Its okay to give credit, but there must be a line of limit for it. So set them realistically, so that the delayed payment should never interfere with your business cycle. Make your accounts team more responsible and keep the follow up right in time.

This applies even for the payables from your end. If you end up using the payables for your business, then you will not get any credit from your supplier to run your business, which harms your cycle again. So, its very important that you take care of this issue very carefully.