Strategies to Try And Improve Net Working Capital
Improve Your Company’s Profits
The most straightforward way to improve working capital, yet one that people tend to overlook in most cases, is increasing profits. You can achieve this by cutting expenses or upping your revenue. Cutting back on staffing or adapting marketing expenses could have the desired results in such cases.
In order to increase revenue, several small businesses borrow money. Working capital will increase if a company puts more money into its business, or if it retains profits. That is where working with a lending company to support your strategy may make more sense. Of course, there are other strategies to try with the ultimate objective to improve your working capital.
Reduce Your Accounts Receivable Cycle
Collecting accounts receivable from your debtors will also help in this endeavor because this will convert amounts due in invoices into liquid cash. Achieving this also makes your networking capital position stronger. You can bill your new customers with either a Net 15 invoice or a Net 30 invoice in place of longer Net 60 or 90 terms. Besides, you can egg on your customers to pay early with early payment discounts.