For a trading business or any other business, managing working capital is absolutely crucial, as an adequate amount of cash should be there at all times to meet short-term business commitments. Following are some effective tips to help you manage working capital efficiently:
For making the payment receivables period short, a business must have a good collection system. The invoices must be generated on time to avoid any inefficiency or delays for receiving the payment.
You must reassess your credit terms and contracts with debtors to ensure that you are not expanding a window for them to pay for goods or services. Debt must be collected on time; otherwise, it could have a negative impact on the working capital.
By making working capital a priority, businesses can surely make some strategic and good investment decisions for operations and other work processes. There must be enough operating liquidity to prevent any huge effect on the company’s cash flow. Read Also: 5 Tips to Manage Working Capital for Your Trading Business
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AuthorAman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management. |