Without working capital, businesses struggle to honor financial commitments. Fortunately, businesses that employ the following strategies will be more likely to see their working capital increase.

Access Financial Forecasts

Financial forecasts are key for making sure your business has sufficient cash. They will let you be proactive rather than reactionary.

Eliminate Unnecessary Expenses

Thanks to unnecessary expenses, many businesses suffer financially when they don’t have to. Renting more office space than is truly needed and paying for redundant software and equipment are a few examples of unnecessary costs to avoid. Periodically review your business’s outgoing cash to see if any of it’s going toward expenses you can excise.

Improve Accounts Receivable Practices

Problems with accounts receivable can hamstring a business’s access to cash. Potential steps toward improvement include adopting clear procedures and simplifying the process for customers.

Sequence Bill Payments Carefully

Paying bills on time is important, but paying them too early can deplete a business’s working capital. If you’re worried about missing a payment, set up automatic ones that trigger on payments’ due dates. That will let you avoid late-payment penalties while keeping a more comfortable amount of cash on hand. On the other hand, if paying early lets you access a significant discount, strongly consider taking advantage.

Be Wary about Bulk Purchases

Some vendors offer discounts for bulk purchases, but buying more than your business needs to trigger a discount may reduce your working capital. Instead of jumping on opportunities immediately, carefully assess whether an atypically large purchase will fit within your business’s budget. Also be sure you can use the resulting surplus in a reasonable amount of time.

Open a Business Line of Credit

Business lines of credit are a great way to unlock more working capital. They’re flexible in that your business can withdraw only what it needs, allowing you to access needed cash while generating more manageable monthly payment obligations.

To see how you can improve your business’s financial situation even more, contact KMS Funding today.