Working capital plays a crucial role in determining the success of any business. Working assets always should outweigh current liabilities to ensure financial stability.
However, individuals need to pay extra heed on how to increase their business sales by funding additional operating capital.
There are several methods through which any business enterprise can improve their cash flow and the operating liquidity.
1. Opting for a business loan
A secure and convenient way to increase working capital is through additional fund infusion by means of a loan.
Precisely, business loans can be of critical use as they can suffice when an organisation needs immediate liquidity.
It can also aptly fulfil the day-to-day funding requirements, like meeting business expenses.
Several financial institutions offer customised working capital loans for operating liquidity infusion at competitive interest rates, making it affordable for entrepreneurs. Some business loans are unsecured, meaning you can avail them without any collateral.
Also, the entire process of loan disbursal takes only 24 hours from approval with some lenders. Entrepreneurs can avail a business loan for any or all of the following operational funding needs.
- Payment of wages and salaries
- Rent payment for the office premises
- Utility bill payments
- Purchasing and restocking inventory
- Hiring skilled staff
- Expanding existing capacity to scale up operations.
Apart from these, business owners can utilise the amount of business loans to achieve other day-to-day funding needs as well, such as creditor’s payment and advance regulations. On average, this loan brings funding of up to Rs.30 lakh, depending on borrower’s eligibility.
Moreover, the government also introduced several schemes like MUDRA loans, CGMSE, etc. to extend monetary support to micro and small enterprises. These enterprises contribute about 30% to the country’s GDP.
Availing these loans, such entrepreneurs can thus boost their net working capital and attain business growth through increased production and sales, paving the way for economic prosperity.
2. Cutting down unnecessary expenses
Along with borrowing, paying attention to the reduction of additional or unnecessary expenses can be a crucial method to maintain adequate operational liquidity. Before making any considerable operating expenditure, you must assess the pros and cons of it thoroughly.
For example, providing employees with corporate credit cards will enable managements to track down the expenses and take prompt remedial actions to plug in any loopholes in daily expenditure.
Alongside, businesses can take note of the fixed and variable assets carefully to squeeze out more working capital for sufficient liquidity. Taking such steps, they can effectively boost their slow-moving business.
3. Doing away with unused or unnecessary current assets
Businesses need to make a comprehensive and critical analysis of the investments that are rarely contributing to the progress of a company, including current assets.
For instance, there can be an expensive inventory lying unused for a while now. Considering selling it off or renting out can bring in the much-needed cash.
As another example, leasing out unused office space will generate a substantial amount of working capital to fund operating requirements.
Thus, doing away with or utilising such assets can be a suitable option to infuse liquidity and fund operations.
4. Choosing negotiable vendors
With years of purchase, businesses establish a favourable relationship with their vendors. They can thus utilise it to their advantage and renegotiate business contracts as well as delivery schedules to free up the net working capital for an extended period.
Following these simple tricks and making a few alterations in business strategies, shrinking up business travels expenses, and the likes, business owners can multiply their finances for decent business raise.
Businesses can utilise various government schemes to increase their operational liquidity. They can also do this with advances like business loans from financial institutions like Bajaj Finserv.
The lender also brings pre-approved loans that make the process of financing hassle-free. They provide these offers for various financial products like business loans, personal loans, etc. You can check your pre-approved offer just by providing some essential personal details online.
In addition to this, organisations can also revise their business policies to take full advantage of several tax breaks, and take similar measures to ensure that the business never runs out of working capital.
Taking necessary measures to maximise, restore and allocate available liquidity for efficient operations can result in increased revenues ultimately.