Working capital is the amount of money your business has available to it on a daily basis, for the conduct of operations and for investment in business growth. If you can secure working capital loans, it can be highly advantageous to your business, and might even be the difference between business success or failure. Here’s how you can put working capital loans to use to help your business advance to the next stage of development.
It’s always best to try to secure working capital before you actually plan to use it so that your business plans aren’t obstructed by a lack of funding. When you recognize that your business is about to enter a growth period, you will need to increase the level of staffing at your company. Working capital loans can be used to cover the cost of salaries for those extra individuals, and then when more business starts to roll in, you’ll have the incoming revenue to cover that additional payroll cost.
Covering Expenses During a Slow Season
Many businesses are subject to a lull throughout the course of the year where sales typically take a downturn for some period of time. If your business is a seasonal one like this, having extra working capital can get you through this downtime so that you can make it to a more profitable season.
If your business is like most others, your customers probably place orders well before they actually pay for them. That of course, puts you on the hook for the cost of purchasing materials needed to fulfill those orders, and since you have no customer payments for them as yet, you’ll be obliged to pay for those materials out of your own resources.
When you have enough working capital to pay for all needed raw materials, you can cover these expenses adequately, until you are finally paid by customers for the finished products. Many businesses are required to use working capital to bridge the gap between order placement and customer payments, so working capital can be an essential component of any business’ normal operations.
Interested in working capital loans?
When you have sufficient working capital, it’s much easier to spur business growth and to help your business expand as you want it to. Contact us at Avery James if you are looking for a working capital loan to take your business to the next level.