Financing working capital is a common hurdle that small business owners have to overcome. Whether you’re a manufacturing, service, transportation, or tech company, it is vital to have working capital on hand when you’re looking to upgrade equipment, purchase new equipment, expand your facilities, transport materials, or invest in research and development.
Best Practices to Improve Working Capital:
Track payment behaviors of your customers
Be sure to set up an automated tracking mechanism to flag you for consistently bad customer behavior. Customers that regularly pay late, don’t pay, or are generally difficult to deal with can take a large toll on your business. In other words, it’s ok to fire your customers. Refocus your attention on existing customers and new customer acquisition.
Only have 1 direct contact with your supplier
By having only one 1 direct contact, you will have the opportunity to build a relationship with the supplier. Nailing the human element of your supplier relationship can create an advocate for your business within their organization. This will make it easier to negotiate friendlier payment terms and decrease the likelihood your business will be left hanging if there is disruption in the supply chain.
Establish and maintain sound accounting practices
Clear and explicitly visible expenses will make it much easier for you to cut unnecessary costs.
Make sure your invoices are accurate
Many business owners know that customers commonly look for any reason to pay late. Having inaccurate invoices is an easy excuse, and can be costly, particularly if your invoices are regularly inaccurate.
How to Increase Working Capital Access
There is no cookie-cutter solution for small business working capital financing. The company’s assets, liabilities, industry, and larger economic environment will all impact the business owner’s access to funding
Online business funding is an increasingly popular way to obtain financing for small and medium businesses. EquityNet works closely with investors and lenders to maximize your access to to working capital and are ready to help you navigate this process. If you’re business is looking for funding, fill me in on the basics of your company below, and I will get back to you with best next steps.