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Regardless of the size of your business, all businesses alike must manage the inflow and outflow of cash. Whether you are a small supplier struggling to keep the lights on, a mid-size company coping with the growing pains of shifting customer demand, or a large business navigating complexities within a global supply chain, all businesses need to execute proper management of working capital to maintain a solid balance between growth, profitability, and liquidity.
Working capital management aims to improve the cash flow conversion cycle for the benefit of a business’s liquidity. Managing cash flow is one of the biggest challenges companies face.
Survival or failure of business depends upon the adequacy of working capital and efficiency with which working capital is utilised. Both excessive and inadequate management of working capital undermine the profitability and general offerings statement of a business.
In general, many businesses struggle to manage and sustain good control over short-term cash flows and working capital to fuel operations; however, the pandemic’s combination of challenges makes risk mitigation even more complex. This past year has exposed the obstacles many companies face in working capital management.
To manage working capital in the current landscape, there are multiple steps businesses can focus on implementing now, while also considering what to plan for in the next and beyond.
Support decisions through better data presentation and transparency
Build a rolling daily cash flow forecast for short term liquidity demands
Consider commercial arrangements to accelerate cash flow (ex. extending supplier terms)
Segment customers to identify early payment incentives, credit risks and alternative payments
Evaluate emergency inventory management strategies
At TradeRiver, we work closely with our clients to address their individual challenges, including short-term cash flow. We offer creditworthy businesses an unsecured revolving credit line to cover the full length of the supply chain, bridge funding gaps and maximize client flexibility.
“The TradeRiver facility has become an effective part of our working capital finance, helping with the seasonality of the business.”
Find out more about how it works.