Top 3 Ways to Improve Your Working Capital
Running a business is a lot of work, and you want to do things that simplify your life and reduce your problems. One way to reduce your stress is to ensure that you always have enough working capital on hand. You don’t have to worry about paying your bills or buying enough inventory to help your business grow when you have enough available capital. Here are some ways you can increase the cash in your company’s wallet.
1. Work With Your Suppliers
When you’re first starting in business, you likely have to accept the terms from your supplier because you don’t have a relationship with them and no references to back you. However, once you’ve worked with them for a while and have a solid relationship, you should never hesitate to renegotiate your terms with them.
When negotiating with a supplier, one crucial thing is to never let your personal biases get in the way. You might have formed a good working relationship with the people at the company, but that isn’t going to help you increase your working capital. You can still be good friends with someone and not use them as a supplier anymore.
2. Change Accounts Receivables Process
Waiting on clients to pay is one of the biggest drains on a company’s capital. When clients don’t pay, you don’t have the money to pay your debts. To help encourage people to pay, you could offer a discount if they pay in the first two weeks after receiving their invoice. You’ll find that most people are excited to save some money, so they’ll be more than willing to pay on time. If you have clients that can’t pay the entire amount up-front, work on establishing payment plans for them.
3. Reduce Your Expenses
A significant way to improve your working capital is to reduce your expenses. The less money you have going out every month, the more cash you have on hand. When looking at things to scale back on, make sure you don’t go crazy and cut back too much.
When cutting back, evaluate all areas of your business to see how you can cut costs. For example, if you have vehicles that your employees drive, but not all of them are used all the time, consider selling some of them. You’ll save not only the car payment, but you’ll also save by not paying insurance premiums and gas.
At Charis Commercial Capital, we offer a wide range of working capital solutions to businesses spanning every industry. Contact our offices today to get the funding you need.