The success of an organization depends on how effectively its working capital is managed. Day to day operational expenses pertaining to advertising, salaries, rent etc. needs to be met on a regular basis and thus proper management of working capital is essential. Managing working capital typically refers to strategies being implemented to maintain the requisite amount of operating liquidity on a day to day basis. This involves management of a companys short term assets and liabilities to ensure sufficient cash flow to satisfy short term debt and other operational expenses.
Working capital decisions are short term which is based on cash flows and profitability of a business. Hence measurement and estimation of the profitability is vital. Cash flows can be measured with the help of cash conversion cycle i.e. the time required to convert raw materials into finished products which is then converted into sales. Profitability can also be measured with return on capital and return on equity. These metrics helps a company in understanding its cash flows thereby implementing the techniques to manage proper flow of cash, inventory, managing debtors and looking after the short term finance needs.
Many companies opt for loans to get the required working capital. Loans essentially are of two types, secured and unsecured. Secured loans are lent in exchange of collateral whereas unsecured loans do not need collateral. However, the rate of interest in case of an unsecured loan is generally higher than secured loans. Furthermore, the borrower is also bothered about the monthly repayments until the loan amount is fully repaid.
An entrepreneur who wants to opt for hassle free finance should ideally opt for a business cash advance. Qualifying for a cash advance is not too demanding either. The business should accept credit cards as a form of payment and be in operation for at least for 2 years. Apart from that the business should process a minimum amount of payment per month. In case of cash advance the borrower does not need to be concerned about monthly repayments. The money is automatically repaid through the credit card receivables.
So, if you are looking to meet your businesses working capital needs in an easy way; opt for a business cash advance straightaway.