Working Capital And Your Company

It’s one thing to be thrifty if you own your own business, but you’ll need to open your company wallet if you want to grow your business. Here are some ways to find the working capital you’ll need.

LOOK AHEAD

You monitor your receivables regularly to make sure you have enough to reimburse for supplies, pay vendors and deliver paychecks on time to your employees. You forecast your costs for rent or a mortgage, insurance, marketing, accounting and employee benefits. Strictly speaking, working capital is simply assets minus liabilities, and it’s sometimes hard to find those extra assets.

SEIZE OPPORTUNITIES

Working capital is what’s left over after you pay your bills. Having enough of it can help you maximize opportunities and grow your business. One way to increase working capital is by matching inventory to sales more closely, thus lowering inventory costs.

You can do the same by reducing or eliminating debt, reducing expenses, lowering taxes and either increasing sales or raising prices on popular items. If you would rather not take on additional debt, an angel investor or a partner to grow, these and other steps can help your firm increase working capital. Your tax professional can help you identify more ways to increase working capital.