Improving your working capital allows you to maximize your drivers of cash flow and minimize the number of external loans and investments you accumulate. It helps you manage your upcoming expenses effectively. Here are some effective tips for increasing your working capital:
1. Implement effective inventory management
Effective inventory management involves knowing what is in your warehouse and how to manage your supply chain properly. It helps you meet your customers’ needs, save you money, and control your operation costs successfully.
Buying inventory in bulk can be beneficial for your business. However, remember that your products could take a long time to sell. It’s important to determine whether you can afford to sacrifice valuable working capital and still have sufficient funds for the remainder of your business cycle, before making wholesale purchases.
2. Get a cash flow forecast
A cash flow forecast lets you understand your company’s financial situation; how much working capital you have, and how much you need. To improve your working capital and get an accurate forecast of when you will run out of cash, consider working with bookkeepers and tax experts specializing in small business accounting, like us.
Using our business accounting services in Canada will help you make more informed decisions for your business. We can create a three-way forecast focusing on your loss, profit, cash flow, and balance sheet. Additionally, we offer a fundraising bootcamp that helps you raise capital in six months. It enables you to reap the benefits of having a part-time virtual chief financial officer (CFO). This CFO will participate in fundraising meetings, create pitch decks, and verify financial models or build one from scratch.
3. Apply for online business loans
If you are a small business owner struggling to access working capital and cannot get enough money from your bank, consider using online business loans. Explore your options and seek online lenders who offer short-term business loans accessible through fast and easy online applications.
4. Manage your cash
Paying your monthly bills promptly is essential for avoiding late fees. However, having a minimal working capital could require you to reconsider the time and method you use to pay your bills. For instance, you can hold off on paying your bills until your customers make their payments if you need cash to pay for an immediate expense. Doing this will prevent you from becoming strapped for cash at a critical time.
Your working capital is the cornerstone of your daily operations. It plays a significant role in your business’s success. Therefore, it’s important to have a good understanding of working capital at every stage of your business. Follow the effective tips mentioned in this guide to increase it, and work with skilled tax accountants who can address your needs and requirements. This way, you can easily manage your expenses and take your business to the next level.
If you need the expert assistance of small business tax accountants in Canada, reach out to us. Blueprint Accounting is a cloud accounting firm in Ottawa that offers small business bookkeeping, accounting, and corporate tax services. Contact us today to get a quote!