Working Capital: Learn what your business is and how it works

Find out everything about working capital: what it is, how to do it, tips for staying in blue and why it is so important to the performance of your business

Which is

Working capital is the money you need to support the continuity of your business. Why is it so important to my business? Working capital guarantees the financial health of your company by providing:

– Customer financing resources (on term sales);
– Keeping stocks;
– Ensuring payment to suppliers (purchases of raw material or resale goods), as well as payment of taxes, salaries and other operating costs and expenses.

Working capital is the difference between cash resources and the sum of expenses and accounts payable.

How to make

It all starts with good planning, detailing short- and long-term spending and possible cash inflows. Control is everything! But, in case you need an extra boost, you can use the resources that we separate exclusively for you to have healthy and up-to-date working capital. Check out:


1. Identify and cut expenses

Find out what costs can be lowered and do whatever it takes to cut them. Always be aware of cash flow to keep your finances up to date, as companies often close the door for poor working capital management.

2. Have a lot of discipline

Do not use your working capital to cover some expense and fail to replenish the same amount when cash comes in, this may be the beginning of your downfall. Be “boring” with your financial control, reducing potential risks in the future.

3. Learn to negotiate with suppliers and customers

For suppliers, look for the most comfortable payment methods, with an increase in term, or if the price is cheaper to see, make sure that this discount fits into your working capital planning. For customers, whenever possible try to reduce the funding deadlines. It’s difficult, since competitors can offer better payment terms than yours. However, it does not cost a try.

Leave a Reply

Your email address will not be published. Required fields are marked *