Working capital is the blood that flows through your business's veins. It is the oxygen that allows your business to breathe and the fuel that makes your business run.
Consider this analogy:
A car is a very complex machine which consists of a variety of parts, some big and some small, working together to get you from point A to point B.
Once all of the parts have been put together properly and all of the fluid levels are correct, the car still can not perform its intended function without one important ingredient; gas. You could even give the car a brand new paint job along with a wash and wax, but the car will not drive if it lacks gasoline.
Your business is the car, and all of the various parts that make up your business; marketing, employees, inventory, equipment, etc. are the various working parts of a car. Without working capital (gas), your business (car) can not go anywhere.
Let's step away from the metaphors for a second, in order to get a complete understanding of working capital. Working capital is calculated with this simple formula: Current Assets – Current Liabilities = Current Working Capital. Take this time out to calculate this formula for your business.
Is the difference a positive or a negative number?
If that number is positive, your company "is able to pay off its short-term liabilities," (Investopedia). However, if that number is negative, your company is "currently unable to meet its short-term liabilities with its current assets," (Investopedia) and it is necessary to take fast action.
One of the easiest ways to increase working capital is through a merchant cash advance. A merchant cash advance can provide fast funds that can be used to purchase inventory, update or repair equipment or increase advertising, all things that have the potential to increase your working capital, exponentially.
I say that the merchant cash advance is one of the easiest ways to increase working capital for many reasons.
1. Your application can be approved in 48 hours.
2. You do not need excellent credit or collateral.
3. Repayments are made as automatic payments (a small percentage of your business's daily credit card sales).
4. Qualified merchants can receive as little as $ 5,000 and as much as $ 500,000.
5. The funds can be wired into your account in as little as 10 business days.
If this article has helped you realize that a boost in working capital would be great for your business, do not wait any longer. Find out how a merchant cash advance can work for you.
Source by Gaston Castro