Problems with cash flow in business? Maybe a little bit of working capital is in order. Therapy is what they call the “healing power,” so let’s look at some of the healing powers associated with one of the biggest problems associated with funding, working capital and cash flow needs.
We are all familiar with the old phrase “you need money to make money”; well, we rewrite this today and offer you “need working capital to earn more money”!
The unfortunate part of talking to many entrepreneurs and business owners in many cases is that there seems to be a common belief that sales growth will take care of all the problems of your business; The reality is that he will take care of things for a while, but trust us for a short time.
The benefit contributes to the growth of the fund during the interim period, but in the end you need to solve some very simple questions like of invoice factoring. An example is when your esteemed sellers and suppliers want to be paid before your customers pay you!
So, what is the solution?
Most business owners and financial managers would suggest “going to the bank” or “adding more capital.” It works, of course, if it is really possible – the word “YES”!
What these sales have done is create a gap … for some customers we know, this is a great abyss or canyon!
Naturally, some companies need more working capital financing hong kong than others to solve the cash flow problems we are talking about. This is due to the fact that the so-called “cash conversion cycle” varies from one industry to another, and perhaps even from one company to another in this industry.
The conversion cycle can easily be calculated by any business owner formula?
Take advantage of your pending sales per day, add your inventory on weekdays and subtract debts. This number, in essence, gives you a very simple “acquaintance”. It tells you how long it takes for a dollar to travel through your company. And believe us, sometimes this “trip” seems like a slow meander!
As we have said, some companies need more cash flow than others; For example, a large pharmaceutical company that invests a lot of money before bringing a product to the market, as long as the government approves it for its use! On the other hand, a large retailer does not sell on credit, it only needs cash and credit cards, so its conversion cycle can be much lower.
So, are we taken today? The shorter the control of the money conversion cycle, the better! In addition, you can accelerate cash flow through bank lines of credit, accounts receivable financing and inventory financing, monetize tax credits or securitization of accounts receivable if you are a large company.
Talk to a reliable, reliable and experienced business finance advisor who can help you solve cash flow problems in your business and find working capital solutions to accelerate your money cycle.