How Can Businesses Respond to Working Capital Finance Issues?

04 May 2021
how-can-businesses-respond-to-working-capital-finance-issues

Capital is, irrefutably, the driving force of an organization, especially the MSMEs. Hence, it becomes imperative for a corporation to tackle their working capital finance to ensure the effectiveness of their operability.  

In the previous decade, the overall interest rates were pretty low, which, in turn, helped a lot of companies to source liquidity. However, owing to the emergence of the COVID-19 pandemic, things are changing massively. 

Thus, if you want to keep your working capital finance intact, then you will need to follow some well-measured strategies. Here are a few of them. 

  • Keep Your Inventory in Check 

Having an excessive stock amount can pose to be a nuisance to your working capital finance. The whole issue might become even more prominent if you are unable to sell them at the right time and price. Due to this reason, it becomes imperative for you to manage the inventory of your company as prudently as possible. 

Hence, while evaluating your weekly performance, you should always monitor the same discreetly. This way, it will be easier for you to learn about your stock level and fill them up as per the selling performance. Nevertheless, if you are unable to evaluate your inventory by yourself, then investing in a procurement automation system can be helpful too. 

  • Stop Waiting Till the Eleventh Hour 

Most companies tend to add debt to their balance sheet, primarily because the cost of debt is considered to be lower than the cost of equity. In one way, it is, indeed, quite resourceful and, thus, can help companies gather up the money to expand their business.

However, in some cases, especially if the debt is somewhat substantial, then the amount can put additional stress on you. Hence, it would be better for you to clear the same on a monthly basis. Be sure to keep a track of it as well. Otherwise, handling it will be unfeasible for you. 

  • Try Refinancing Your Fixed Assets 

Do you have an adequate number of fixed assets in your pockets? Then, you can try refinancing them to acquire the required amount of working capital finance

Leveraging the assets and turning them into cash is not something that you can do instantly. 

But, if you are capable enough in the terms of selling, then you can efficiently save yourself from going out of business. 

  • Use a Better Payment System 

While building their core infrastructure, most MSMEs tend to opt for cheaper payment systems to save their capital. However, because of being less proficient and inefficiently secure, they tend to cause problems for the organizations. 

It might also hamper you from receiving payment instantly and make a mess of your working capital finance. So, to avoid this, you will need to implement a better payment system in your infrastructure. It might be a bit costlier than usual, but it will be better for your future.

Conclusion 

Handling the working capital finance of an organization is not an easy feat, especially for a single person. If you are looking to expand your business by raising debt, then you can always opt for Oxyzo. Aside from assisting you with your finance, they can also offer unsecured loans to uplift the financial circumstance of your organization. So, if you need anything, then be sure to leave them a mail at your convenience. They will be happy to help you out! 

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