Title: 6 Ways to Improve Your Company's Working Capital
Headings: 6 Ways to Improve Your Company’s Working Capital
6 Ways to Improve Your Company’s Working Capital
Working capital is calculated by subtracting current liabilities from current assets.
Ways to Improve Working Capital
1. Improve Accounts Receivables Collections
2. Improve Accounts Payable
3. Negotiate Better Pricing with Suppliers
4. Reduce Expenses
5. Segment and Analyze for Credit Risk
6. Review Tax Opportunities
What if You Have Excess Working Capital?
Susan Gunelius

Content: Yes, you want to have positive working capital, but the goal is to have $2 in current assets for every $1 of current liabilities. A company with a 2:1 ratio is effectively managing its working capital. A company with negative working capital is in serious and possibly immediate trouble, but any company with a working capital ratio of less than 2:1 could be in trouble. To ensure your company has enough money to meet its daily financial obligations as well as to fund normal business operations, you must efficiently and effectively manage working capital. Too little working capital could lead to bankruptcy while too much working capital could lead to decreased profits and shareholder value. [clickToTweet tweet=”A big part of #business success depends on how efficiently #workingcapital is used.” quote=”A big part of business success depends on how efficiently workingcapital is used.”] Ways to Improve Working Capital
You can improve working capital by bringing it as close to the ideal 2:1 ratio as possible. Below are six strategies to improve insufficient working capital. Each of these strategies requires that you analyze a number of areas within your business to find ways to adjust processes and improve efficiencies in order to reduce expenses and increase positive cash flow.