Post by account_disabled on Mar 7, 2024 4:09:40 GMT -5
When a company is created, we can divide the investment made into two parts: fixed capital to be used in the company's facilities and a reserve of resources to cover the company's needs over time. The latter is called working capital. How to calculate working capital? Most small business owners think that working capital is simply the money the company has in its bank account. However, it's not just that! Working capital is calculated as the sum of Current Assets (cash on hand, receivables and inventory) minus Liabilities (debts and expenses to be paid off in the next 12 months). With this account, we calculate the real reserve of resources that your company has to cover production and maintenance costs, in addition to any emergency. How much revolving credit should I have? The amount of money set aside for working capital varies depending on how the company operates. Some companies suffer a lot from low market times of the year, which is why they need a larger reserve of money to guarantee the continuity of production, even in difficult times.
Another classic case of a company that needs to increase its capital is when it is experiencing rapid growth and has a demand for services and products that it cannot meet. To meet this demand, it needs to hire and train employees, in addition to supplementing its inventory. This means spending more money before the organization can benefit from this increase in sales. Main ways to obtain working capital Follow us on how your small and medium-sized company can get that extra capital when its sources dry up. 1. Advance on receivables Does your company have credits to be received in the coming months? So, the cheapest British Student Phone Number List to quickly obtain this necessary capital is to make an advance on receivables, whether checks or electronic credits. The main advantage is not having to wait 30 or 60 days to receive the money you obtained from the sales you made. However, the disadvantage is that the bank discounts a certain interest rate to carry out this service, causing the bonds to lose part of their profitability in the process. However, this rate tends to be lower than if we were to take out a loan, for example.
Although it is a good option, try to use it when it is really necessary. 2. Bank Loans If you have nothing to receive, taking out a loan is an option to get that extra capital for your company. However, this requires a lot of planning. The first thing is to know exactly how much money you need and, most importantly, when you will be able to pay off the debt. Work with realistic deadlines, without taking too many risks, taking into account that some unforeseen circumstances may arise along the way. Research is also a key word when it comes to borrowing money. Know in detail all the credit lines available at different banks before closing an agreement and always carry out detailed simulations. The minimum value of the invoice must always be observed, however, you must always do your best to pay the full amount of each installment, so as not to have to pay extra interest to the bank. 3. Guaranteed account A guaranteed account is a type of revolving credit that is very similar to a special check, but has lower rates. It is a credit limit provided by the bank based on some type of guarantee, such as your company's receivables represented by checks, bills, electronic credits.
Another classic case of a company that needs to increase its capital is when it is experiencing rapid growth and has a demand for services and products that it cannot meet. To meet this demand, it needs to hire and train employees, in addition to supplementing its inventory. This means spending more money before the organization can benefit from this increase in sales. Main ways to obtain working capital Follow us on how your small and medium-sized company can get that extra capital when its sources dry up. 1. Advance on receivables Does your company have credits to be received in the coming months? So, the cheapest British Student Phone Number List to quickly obtain this necessary capital is to make an advance on receivables, whether checks or electronic credits. The main advantage is not having to wait 30 or 60 days to receive the money you obtained from the sales you made. However, the disadvantage is that the bank discounts a certain interest rate to carry out this service, causing the bonds to lose part of their profitability in the process. However, this rate tends to be lower than if we were to take out a loan, for example.
Although it is a good option, try to use it when it is really necessary. 2. Bank Loans If you have nothing to receive, taking out a loan is an option to get that extra capital for your company. However, this requires a lot of planning. The first thing is to know exactly how much money you need and, most importantly, when you will be able to pay off the debt. Work with realistic deadlines, without taking too many risks, taking into account that some unforeseen circumstances may arise along the way. Research is also a key word when it comes to borrowing money. Know in detail all the credit lines available at different banks before closing an agreement and always carry out detailed simulations. The minimum value of the invoice must always be observed, however, you must always do your best to pay the full amount of each installment, so as not to have to pay extra interest to the bank. 3. Guaranteed account A guaranteed account is a type of revolving credit that is very similar to a special check, but has lower rates. It is a credit limit provided by the bank based on some type of guarantee, such as your company's receivables represented by checks, bills, electronic credits.