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Keeping creditors at bay with Working Capital Finance

Published on 25th January 2019

Are you struggling to keep up with your financial obligations? No matter how big or small your business may be, maintaining your day-to-day operations is certain to run up any number of expenses. That’s why you need to exercise constant vigilance over your business’ finances, minimising your costs wherever possible. Ideally, you want to be aiming for Positive Working Capital, but that’s sometimes easier said than done. However, if you’re not in control of your expenses you could be losing money unnecessarily, making it even more difficult to stay ahead of your financial obligations. Yet rather than run the risk of rubbing your creditors up the wrong way, you could help to support your business’ expenses by applying for Working Capital Finance.

How can I work out my business’ working capital?

An essential part of running your own business is staying on top of your working capital, which determines how much you can safely spend. In order to establish where your business stands in terms of its working capital situation, you need to take into account your Total Current Assets and subtract from it your Total Current Liabilities, giving you your business’ Net Working Capital.

Net Working Capital = Total Current Assets - Total Current Liabilities

  • Total Current Assets: cash sums, accounts receivable, inventory and supplies that can be sold or converted into cash within the space of 12 months.
  • Total Current Liabilities: your company's debts and financial obligations that must be resolved within 12 months (e.g. payroll, staff wages, Corporation tax, payable interest, accrued expenses, customer deposits, etc.)  

Naturally, you’re aiming for a situation where your Total Current Assets exceed your Total Liabilities, meaning that your business has Positive Working Capital. But if the opposite is true and you have Negative Working Capital, it means that your business is losing money and is a situation you need to tackle and turn around.

Are you suffering from negative working capital? Need help turning the situation around before it gets out of hand? Apply for Working Capital Finance and learn more about how your business could benefit.

How can I keep my working capital under control?

If you discover that your business has Negative Working Capital you need to act fast. Although it’s important to stay calm in this situation, you must react by carefully assessing every detail of your business’ finances. Doing so, you may discover areas where you’re losing money without even realising it. Just some of the ways in which you can restore and maintain Positive Working Capital are:

  1. Pay your suppliers on time - Naturally, it can be tempting to try and hold onto the cash owed to your supplier, but by paying them on time you can build up a good relationship. This will make it easier for you to negotiate lower supply costs and could allow you to take advantage of limited time offers from them.
  2. Review your expenses - As the size of your team expands, managing your small expenses can be difficult. However, if you’re not keeping track of them, these small expenses can grow and amass into one big utility bill. This is why you need to manage company culture and set down clear rules regarding aspects such as travel, dining, and entertainment. Even telling employees to turn off their computers and switch off lights at the end of each day could save your business money in the long-run.
  3. Manage your stock - One area that many businesses find themselves losing money is their stock. Purchasing more stock than you’re able to hold or selling damaged items can easily result in a loss of earnings. This is especially true if you’re working with perishable goods that have an expiry date. To minimise the risk of overstocking your inventory, maintain effective communication and reporting processes between every department in your business.
  4. Cancel any unnecessary subscriptions - During the course of your business’ development you may have signed up to a number of subscription services which might involve anything from security software, CRM systems and entertainment to news feeds. However, over time you may have upgraded and, in your excitement, forgotten about the existing scheme. As such, you may be paying out for a service you’re no longer using. If, after carrying out a thorough review, you find services that you’re paying out for unnecessarily, cancel them. In doing so you could be saving your business a small fortune.
  5. Install E-procurement technology - Installing E-procurement technology can help you and your team manage the monitoring, ordering, and purchasing of goods and services. Just some of the software providers available to you are Bellwether, Periscope Holdings Inc. and Coupa Software.

How can I support my business with Working Capital Finance?

However, if after carrying out an in-depth review and adjustment of your business’ finances you’re still losing money, you could support your business by applying for Working Capital Finance. Providing access to a range of specialist business finance solutions, Working Capital Finance not only enables you to stay on top of your expenses but to target and invest in the areas that are losing you money, as well as areas that could grow and scale. So, as well as giving you the means to make urgent payments and resolve tax demands, Working Capital could be used for purchasing supplies, paying staff, repairing damaged equipment, funding an existing project and business purchases to emergency aid. This is made possible by the availability of products such as Merchant Cash Advance, Factoring, Discounting, Overdraft Replacement and Asset Refinance.

Therefore, if you've got negative working capital, there’s no need to suffer in silence. You can provide your business with all the strength to turn the situation around, and fast, with Working Capital Finance. All you need to do is find a suitable finance solution for your business, which is where speaking to qualified business finance professional could help.

Applying for Working Capital Finance?

Working Capital is part and parcel of running a business in the UK. Yet although you naturally want to keep your business operating costs as low as possible, reality doesn’t always pan out that way. As such, you could be losing money each working day without even realising it. But before the situation gets out of your control with disgruntled creditors banging on your door, you could tackle the issue head-on with Working Capital Finance. Offering you access to a wide range of business finance solutions, suitable for an array of the financial situation, all you need to do is choose a product that appropriates for your business. Fortunately for you, that’s where we can help.

At Rangewell, we’re an Access to Finance specialist who’s mapped over 400 lenders to offer you an overview of more than 23,000 business finance products and solutions. Our services are free to use and we’ll also support and guide you through the application process. So if your business is suffering from negative working capital and you need to turn the situation around as soon as possible, apply for Working Capital Finance today or find out more with Rangewell.


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