Improving working capital is a common goal of most manufacturers. This becomes particularly important when a business is looking to raise capital from investors or undertake strategic growth initiatives, whether it be upgrades to equipment, purchases of new equipment, facility expansion, transportation of materials, or research and development. Here are some ways access more working capital to grow your manufacturing business.
Best practices for manufacturers to improve working capital
Automate customer payment tracking
Be sure to track your customer payment history to identify customer set up an automated tracking mechanism to flag you for consistently bad customer behavior. Customers that are difficult to deal with may be hurting your bottom line, preventing you from focusing on gaining easy to manage customers. Red flags are consistent late or missed payments. The resources you spend tracking down late or missed payments can rack up quickly. In other words, it’s ok to fire your customers. Refocus your attention on existing customers and new customer acquisition.
Build a positive working relationship with your supplier
I would recommend to maintain 1 direct contact with your supplier. This will give you time to develop a personal relationship with the individual, and ensure that one person understands your company’s needs inside and out. This becomes particularly useful in cases of supply chain disruption. That individual will become an advocate for your company within your supplier organization and over time may open the door to discounts.
Develop sound accounting practices from day 1
Good accounting practices are critical to maximizing profitability and getting the best return on investment. This will empower you to identify areas of opportunity, and cut unnecessary costs.
Perfect the your CRM
Investing time to develop a solid CRM – from acquisition to client-servicing – is a vital part of growing a manufacturing business. Test cheap and quick ways to acquire more customers, and develop systems that outline and deliver on customer expectations. For example, incorrect invoices being sent to a client is a common, but preventable mistake, that disrupts your cash flows and decreases access to working capital.
How to get access to more working capital
There is whole-proof solution for manufacturing businesses to finance working capital. Each business owner will have a different combination of liabilities, assets, and industry and economic conditions. Understanding your options and working with someone who is familiar with financing in the space is critical.
Manufacturers are increasingly turning to online business funding as to obtain financing for working capital and growth. We work closely with capital providers interested in funding manufacturing businesses, and are ready to help you find the financing you need.