All businesses need sufficient cash on hand with which to operate. When money shortfalls occur business activity can be affected and profit potential decreases. Many businesses need an infusion of cash from time to time, especially in tough economic times.
Working Capital: A Brief Definition
Working capital is the sum of a company’s current assets, including cash, accounts receivable, and the value of its inventory minus its financial liabilities including its debt and accounts payable. As such, it represents the free cash on hand available for running business activities.
Working capital is a good gauge of a business’s short-term financial health. If a company has a strong working capital position, then it has the potential to achieve continuing profitability and grow. On the other hand, negative working capital indicates that a business may have trouble continuing to be viable. It may even need to cease operations.
Financing Solutions To Increase Working Capital
If your business needs an infusion of working capital, there are a number of options that may wish to consider. These include:
- Short-term loans
- Accounts Receivable Financing
- Equity Funding
- Loans from Suppliers, often termed Trade Creditor Loans
- Lines of Credit
- Merchant Cash Advances Â
The first place that many business owners tend to look for financing is often a traditional bank or credit union. Other sources, such as capital agencies and business development companies, are available to you. In the latter case, you may be able to obtain funding much more quickly than with a bank.
Connect with Crimson Stone
Our company, Crimson Stone Capital Solutions, is in business to help other businesses succeed. If you need more working capital to optimize your business activities give us a call. We can tailor-fit a solution that is best for your situation.
