Title: 4 Tips for Effectively Managing Working Capital - SoftCo
Headings: 4 Tips for Effectively Managing Working Capital
4 Tips for Effectively Managing Working Capital
Blog - 29 Oct 2020
Benefits of Positive Working Capital
Improved Liquidity
Operational Efficiency
Increased Profits
Achieving the Correct Level of Working Capital
The State of Working Capital in 2020
Tips for Effectively Managing Working Capital
1. Manage Procurement and Inventory
2. Pay vendors on time
3. Improve the receivables process
4. Manage debtors effectively
Conclusion
Posted by
James Duffy

Content: Tips for Effectively Managing Working Capital
1. Manage Procurement and Inventory
Prudent inventory management is an important factor in making the most of your working capital. Excessive stocks can place a heavy burden on the cash resources of any business. On the other hand, insufficient stock can result in lost sales and damage to customer relations. When looking at inventory, it is important to monitor what you buy, just as much as what you sell. The key challenge for companies is to establish optimum stock levels and avoid driving up costs for physical storage and insurance as well as wasting stock if it is time-sensitive. This can be done by promoting better communication and forecasting between departments. If stock levels are unknown, then it is difficult to manage the optimum level and the company risks experiencing a loss in sales, as a result of a shortfall in materials. Periodic inventory checks are useful in monitoring levels of different types of stock and alerting finance to any recurring overstock or understock issues. It is extremely important to control what is purchased.