{"id":156,"date":"2018-04-19T07:07:29","date_gmt":"2018-04-19T07:07:29","guid":{"rendered":"https:\/\/blog3.indifi.com\/?p=156"},"modified":"2021-01-13T06:00:43","modified_gmt":"2021-01-13T06:00:43","slug":"management-of-working-capital","status":"publish","type":"post","link":"https:\/\/www.indifi.com\/blog\/management-of-working-capital\/","title":{"rendered":"The Simple 3-Step Guide For Effective Management Of Working Capital"},"content":{"rendered":"\n<div class=\"wp-block-image size-medium wp-image-669\"><figure class=\"alignleft\"><img loading=\"lazy\" decoding=\"async\" width=\"500\" height=\"281\" src=\"https:\/\/blog3.indifi.com\/wp-content\/uploads\/2018\/04\/The-Simple-3-Step-Guide-for-Effective-Management-of-Working-Capital-500x281.jpeg\" alt=\"The Simple 3-Step Guide for Effective Management of Working Capital\" class=\"wp-image-669\"\/><figcaption><em>The Simple 3-Step Guide for Effective Management of Working Capital<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Many businesses struggle to make profits and grow. Very often, the reason for this is not lack of customers or an innovative product or service, but the lack of \u201cWorking Capital Management Skills.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yes, the working capital is the life and nerve centre of your business. Let\u2019s explore, what is working capital and why it matters to the success of your business.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.indifi.com\/blog\/management-of-working-capital\/#What_Is_The_%E2%80%9CWorking_Capital%E2%80%9D_Of_A_Business\" >What Is The \u201cWorking Capital\u201d Of A Business?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.indifi.com\/blog\/management-of-working-capital\/#Why_Working_Capital_Matters\" >Why Working Capital Matters?<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.indifi.com\/blog\/management-of-working-capital\/#Step_1_It_All_Starts_With_Assessing_Your_Current_Position\" >Step 1: It All Starts With Assessing Your Current Position<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.indifi.com\/blog\/management-of-working-capital\/#Step_2_Create_An_Action_Plan\" >Step 2: Create An Action Plan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.indifi.com\/blog\/management-of-working-capital\/#Step_3_Look_To_Boost_Your_Working_Capital_With_Loans\" >Step 3: Look To Boost Your Working Capital With Loans<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.indifi.com\/blog\/management-of-working-capital\/#Wrapping_It_Up\" >Wrapping It Up<\/a><\/li><\/ul><\/nav><\/div>\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_The_%E2%80%9CWorking_Capital%E2%80%9D_Of_A_Business\"><\/span>What Is The \u201cWorking Capital\u201d Of A Business?<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<p class=\"wp-block-paragraph\">Simply put, it\u2019s the cash in hand to meet day-to-day expenses\/ operations of a business. Technically, it\u2019s difference between the current assets and liabilities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The formula to calculate working capital = Current Assets\u200a\u2014\u200aCurrent Liabilities\/debts<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Also Read:\u00a0<a rel=\"noreferrer noopener\" href=\"https:\/\/www.indifi.com\/blog\/five-ways-working-capital-loans-can-work-for-your-business\/\" target=\"_blank\">Five Ways Working Capital Loans Can Work For Your Business<\/a><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Working_Capital_Matters\"><\/span>Why Working Capital Matters?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">It works as an indicator of the efficiency, liquidity and overall health of your business. When a company doesn\u2019t have sufficient working capital in hand, to meet its day-to-day obligations, it could lead to legal troubles, liquidation of assets, financial insolvency and even bankruptcy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Thus, it becomes crucial to have adequate working capital, for smooth functioning.<\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-background has-vivid-green-cyan-background-color\" href=\"https:\/\/www.indifi.com\/working-capital-loans-india\">Working Capital Loan<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Here, is a step-by-step guide on how you can efficiently manage working capital, thereby leading to the success of your business:<\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Step_1_It_All_Starts_With_Assessing_Your_Current_Position\"><\/span>Step 1: It All Starts With Assessing Your Current Position<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<p class=\"wp-block-paragraph\">Start with a comprehensive analysis of all incoming and outgoing assets. Once you start monitoring, you can identify potential trouble spots like payments that arrive consistently late, and invoices that have been sitting way past the due date.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Get your entire team on board, right from the top management to the people in charge of collecting outstanding and making payments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With continuous monitoring of baseline metrics and other varying factors, you begin to develop a working capital management strategy that suits your situation.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Step_2_Create_An_Action_Plan\"><\/span>Step 2: Create An Action Plan<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<p class=\"wp-block-paragraph\">Once you\u2019ve gathered the data, it\u2019s time to take some steps in the right direction. Start by developing a plan that can be rolled out in phases. This is because making top-to-bottom changes at a single go is not only challenging but could end up throwing a hammer in the entire operation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So create small, practical and measurable action plans with target dates and accountability. Here are a few key measures to include in your action plan:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u00b7 Streamlining of supply and manufacturing chains<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u00b7 Closer collaboration with customers and suppliers<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u00b7 Better communication and coordination between supply, manufacturing, logistics and planning processes<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u00b7 Optimisation of billing and cash collection mechanisms with more effective management of payments<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u00b7 Look to implement a more robust supply chain management policy<\/p>\n\n\n\n<p class=\"has-text-color has-vivid-green-cyan-color wp-block-paragraph\">Also Read: <a href=\"https:\/\/blog.indifi.com\/alternate-using-equity-to-finance-working-capital\/\">Using Your Equity To Finance Working Capital? Here\u2019s A Better Alternative. <\/a><\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Step_3_Look_To_Boost_Your_Working_Capital_With_Loans\"><\/span>Step 3: Look To Boost Your Working Capital With Loans<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<p class=\"wp-block-paragraph\">Limited working capital can severely cripple the growth of your business. It impacts all areas of business, right from inventory purchase to making supplier payments and much more. So, make sure that working capital (or rather the lack of it) doesn\u2019t throw you off your growth curve.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Instead of having to do with limited working capital, try to boost it by availing external debts. Digital lenders, like indifi offer you an array of services like invoice discounting, a line of credit, merchant cash advance and several others, that help you get an instant loan quickly to boost your working capital.<\/p>\n\n\n\n<p class=\"has-text-color has-vivid-green-cyan-color wp-block-paragraph\"><a href=\"https:\/\/www.indifi.com\/working-capital-loans-india\">Apply For Working Capital Business Loan<\/a><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Wrapping_It_Up\"><\/span>Wrapping It Up<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Use the practical management steps listed here to boost your working capital, and improve the operational and financial efficiency of your business, thereby increasing your revenues.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many businesses struggle to make profits and grow. Very often, the reason for this is not lack of customers or an innovative product or service, but the lack of \u201cWorking Capital Management Skills.\u201d Yes, the working capital is the life and nerve centre of your business. Let\u2019s explore, what is working capital and why it [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":669,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[141],"tags":[12,26,13,31,64],"class_list":["post-156","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-business-loans","tag-finance","tag-small-business-loans","tag-working-capital","tag-working-capital-loan"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts\/156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/comments?post=156"}],"version-history":[{"count":8,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts\/156\/revisions"}],"predecessor-version":[{"id":3808,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts\/156\/revisions\/3808"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/media\/669"}],"wp:attachment":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/media?parent=156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/categories?post=156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/tags?post=156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}