What is Working Capital?
It is a good idea to become more acquainted with the term because you're going to be hearing it a lot in the coming months as we focus on our economy and the continuing growth of our businesses in these difficult times.
The quick definition is; The immediate available cash your business has to make purchases.
Here is a more detailed definition; A financial measurement that represents the liquid funds available to a business.
Along with fixed assets such as buildings and equipment, working capital is considered a part of operating capital.
A way to calculate this is to combine your current assets and subtract your current liabilities.
If your current assets are less than current liabilities, you have a working capital deficiency.
Your company can have many assets and be profitable but short of liquidity if your assets cannot be easily converted into cash.
It is important to have positive cash flow to ensure that your business is able to operate effectively and that it has sufficient funds to pay off its current debt and any upcoming operational expenses.
The management of working capital involves managing inventories, accounts receivable and payable and cash.
What is it used for? Available cash is extremely important if you want expand your business.
It is needed for things like advertising and marketing, inventory, renovation and expansion.
How can my business grow if I have a working capital deficiency? All too often businesses are stuck in a situation where they need to expand to make more money or they need to make more money to expand.
Does this sound familiar? In other words; it takes money to make money.
One way around this is to take out a business loan.
You can use the money to invest into your business and pay it back later.
The problem with a business loan is that it has become extremely difficult to get during this so-called credit crunch.
Another solution is a merchant loan or business cash advance.
What is a merchant loan? A business cash advance is much easier and faster to get than a business loan and it does not require collateral.
A merchant loan is generally more expensive than a traditional business loan, but if used wisely, can bring tremendous benefits.
Follow these links if you would like to learn more about using business cash advance to help your business grow.
The quick definition is; The immediate available cash your business has to make purchases.
Here is a more detailed definition; A financial measurement that represents the liquid funds available to a business.
Along with fixed assets such as buildings and equipment, working capital is considered a part of operating capital.
A way to calculate this is to combine your current assets and subtract your current liabilities.
If your current assets are less than current liabilities, you have a working capital deficiency.
Your company can have many assets and be profitable but short of liquidity if your assets cannot be easily converted into cash.
It is important to have positive cash flow to ensure that your business is able to operate effectively and that it has sufficient funds to pay off its current debt and any upcoming operational expenses.
The management of working capital involves managing inventories, accounts receivable and payable and cash.
What is it used for? Available cash is extremely important if you want expand your business.
It is needed for things like advertising and marketing, inventory, renovation and expansion.
How can my business grow if I have a working capital deficiency? All too often businesses are stuck in a situation where they need to expand to make more money or they need to make more money to expand.
Does this sound familiar? In other words; it takes money to make money.
One way around this is to take out a business loan.
You can use the money to invest into your business and pay it back later.
The problem with a business loan is that it has become extremely difficult to get during this so-called credit crunch.
Another solution is a merchant loan or business cash advance.
What is a merchant loan? A business cash advance is much easier and faster to get than a business loan and it does not require collateral.
A merchant loan is generally more expensive than a traditional business loan, but if used wisely, can bring tremendous benefits.
Follow these links if you would like to learn more about using business cash advance to help your business grow.