The day-to-day management of the business of its short-term assets and liabilities is called working capital. Also It is important to understand GST impact on small businesses. Managing it is a critical aspect of every business which ensures its continued progress.
The simplistic formula for calculation of working capital is current assets minus current liabilities. Well, there are several determinants to working capital such as -
Create a meticulous inventory list and optimally manage them. Additionally, you can look into consignment stock dealing to know where the stock is to help know its buying and selling and for better assessment. Forecasting inventory will ensure that the business manages its current stock well and does not order more than what is needed.
Moreover, an effective management of your business inventory will result in flexible and scalable financing. For instance, business loan from leading NBFCs is available with the Flexi Loan facility. This is a unique feature which lets you withdraw as per your business needs. This practice, in turn, synchronizes well with the requirement of inventory and avoids unnecessary accumulation of debts.
Maintain healthy credit terms which is a measure of your businesses credit worthiness. This is imperative to maintain the balance in the working capital too. As a healthy relationship with vendors, suppliers, dealers can lead to flexibility in business dealings. For instance, as Flexi Loan facility charges interest only on the amount withdrawn it helps to comfortably maintain a healthy cash flow and keeps the lending costs low.
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Aman 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.