Working capital is the lifeblood of a business. This important driver enables the efficient day-to-day running of an organisation and provides capital to invest in other areas of the business such as increasing the workforce, upgrading equipment and purchasing inventory.
Take a look at some of the ways in which you can use working capital to develop your strategy and show your business some love:
Help manage cash flow
Managing cash flow is a delicate balance and there are times where help may be needed to cover crucial transactions such as payroll or property payments. Effective reporting will efficiently identify low points in business activity and highlight areas that need to be addressed before a shortfall. This type of planning and reporting can also assist in gaining finance to drive the business forward.
Replacing or updating equipment
As times change, so does the equipment and technology that is required for normal business operations. Equipment upgrades can be an expensive outlay especially for businesses that have shortfalls or leaner working capital periods. With this extra cost, opting for a funding injection can ensure you have the latest technology to increase productivity without the need to impact the overall running expenses of day-to-day activities.
Bridging seasonal shortfalls
Every business, no matter the sector recognises seasonal changes in activity. For some industries this has little effect but for others, this can be a tough time especially when cash flow is heavily affected. Working capital is key to ensuring a smooth transition through the peaks and troughs of trading but for those that don’t have the option of surplus funds to see them through, business finance can help bridge this short-term cash flow gap to keep the company ticking over.
Growing the business
For most businesses growth and development strategies are crucial for keeping a company competitive in the marketplace. If your company has stagnated working capital, reaching this goal will prove harder to achieve. Funding growth requires a surplus in cash flow and a working capital loan can provide this support to invest in improving opportunities and keeping you ahead of competitors.
Managing unexpected expenses
No matter how well you plan and monitor your cash flow, sometimes the unexpected can happen. Whether this is repairing machinery or riding out a sudden shift in the market, a cash flow buffer can help ease these testing situations. If the business lacks a natural safety net from its working capital, opting for funding can assist during these unavoidable circumstances. Using this type of finance can give your organisation the help it needs to maintain normal operations without the need to make further difficult business decisions.
Some businesses no matter the size sometimes need a helping hand to bridge the gap in working capital in order to bring ideas to fruition. Working capital loans can assist in taking the business forward and are often attainable by using assets or inventory as collateral in the lending criteria. If you’re looking to take your company further, contact us for a tailored finance solution.
If you’re looking for more advice on how business finance can help your development, contact us today and speak with one of our finance professionals.