Working Capital Optimization: Strategies for Small Businesses

This post was originally published on On Deck

Working capital optimization might not be your first thought when considering the financial health of your small business. But optimizing working capital is key to thriving in today’s competitive market.

The modern era of business requires you to think and move fast, especially when considering supply chain complexities, the drive for increased profitability and the potential for automation to streamline processes.

If you’re looking for strategies to improve the cash flow management of your business, here’s what it means to optimize your working capital — and how you can do it.

What Is Working Capital Optimization?

Working capital optimization is the process of managing a business’s short-term assets and liabilities to maintain liquidity. It’s about finding the perfect balance between having enough cash flow to cover daily operations without tying up too much in assets or being in excessive debt.

The working capital optimization cycle is a financial strategy. It involves understanding and managing the timing of cash inflows from receivables, the cash outflows for payables, and the holding period of inventory. The goal is to reduce the cash conversion cycle, freeing up cash that can be used for other productive purposes within the business.

How Do You Improve Your

Read the rest of this post, which was originally published on On Deck.

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