The ability to meet short-term obligations is essential for a business’s long-term survival. Working capital ensures that a business has enough funds to cover its daily expenses and stay afloat even during difficult times. It also allows business owners to finance their growth without incurring debt. While the concept is simple, managing working capital can be complex. This article will address some of the key questions about working capital and why it is so important for small businesses.
Working capital is the cash and other liquid assets that a business uses to operate on a day-to-day basis. It is important for businesses to have enough working capital to cover their expenses, such as accounts payable, inventory, and wages. Working capital loans can help businesses to meet their short-term financial needs, such as purchasing inventory, expanding into new markets, or hiring new employees. MSMEs can use working capital loans to finance a variety of business activities, including:
Working capital loans can be used to purchase inventory, which is essential for businesses to keep their operations running smoothly.
Working capital loans can also be used to renovate business premises, such as adding a new signboard or upgrading the interior.
Working capital loans can be used to pay worker salaries, especially during seasonal or peak periods when businesses need to hire more employees.
Working capital loans can be used to repair machinery, which is essential for businesses to maintain their production capacity.
Working capital loans can be used to purchase new technology, such as point-of-sale (POS) machines or computer systems.
Working capital loans can be used to pay rent for storage facilities, which is important for businesses that need to store inventory.
Working capital loans can be used to add new product lines, which can help businesses to expand their market share.
Working capital loans can be used to expand into new markets, which can help businesses to grow their sales.
Working capital loans can be a valuable source of funding for businesses, but it is important to use them wisely. Businesses should only borrow as much as they need and should make sure that they can repay the loan on time.
Working capital is the liquid funds that businesses use to manage their daily operations and expenses. It is important for businesses to have enough working capital to cover their short-term financial obligations, such as accounts payable, inventory, and wages. Working capital loans can help businesses to meet their short-term financial needs, such as purchasing inventory, expanding into new markets, or hiring new employees.
MSMEs can use working capital loans to finance a variety of business activities, including stock or raw material purchase, business premises renovation, worker salaries, machine repair, technology for business, storage or godown rent, adding new product lines, and market expansion into new geographies. Working capital loans can be a valuable source of funding for businesses, but it is important to use them wisely. Businesses should only borrow as much as they need and should make sure that they can repay the loan on time.
What is working capital management? It is an effective business tool that helps small enterprises make the correct use of assets and preserve enough cash to sustain the smooth running of operations.
Efficient working capital management can empower business owners to free up the cash that is otherwise trapped in the balance sheet. This opens the door to business expansion without incurring any external debt.
While at a basic level working capital is a necessity for the sustenance of a business, working capital management is the act of striking a balance. It allows business entities to effectively meet both expected and unexpected costs and make the best use of their money. Here is why working capital management is a vital step for small business owners:
One of the top reasons that understanding and managing working capital is so critical is the fact that it plays into managing liquidity. The efficient analysis of incurred and payable expenses gives small businesses enough time to plan funds and successfully meet all short-term obligations.
One of the primary advantages of managing working capital is ensuring operational stability even in crash-crunch situations.
Timely payments and meeting all obligations build goodwill. This adds value to the business name and can be leveraged to build healthy business relationships and scale up to stay ahead of the competition.
Working capital management helps in accurately assessing funding needs. This makes decision-making easy for small business owners and gives them a clear picture of the funds required for daily expenses and the need for external infusion or allotment of any surplus.
Working capital covers various running expenses such as employee salaries, supplier payments, taxes, and rent. This ensures the smooth running of daily operations and plans for financial contingencies.
Kinara Capital offers both long-term and short-term (only for existing Kinara customers) collateral-free working capital loans to small business owners in the manufacturing, trading and services sectors. Some of the top features of business loans from Kinara Capital include:
Check eligibility for collateral-free working capital loans in these 3 easy steps now!
Working capital management is the process of effectively managing a business’s current assets and current liabilities. It is important for small businesses to manage their working capital effectively in order to ensure that they have enough cash on hand to meet their short-term obligations.
If managed right, working capital can facilitate business growth, even out revenue fluctuations, and optimise capital performance. This can help businesses avoid cash flow problems, operate more efficiently, and make better financial decisions.
Kinara Capital offers collateral-free working capital loans for small businesses to help them seize every growth opportunity. Registered MSME owners can evaluate their eligibility for a loan in just 1-minute by starting the digital-first application process on the Kinara Capital website or by downloading myKinara App. Eligible MSME entrepreneurs can submit the necessary documents and the loan amount will be disbursed digitally to their bank account within 24-hours.
Kinara Capital also provides multilingual doorstep customer services to MSMEs interested in learning more and needing assistance to apply. For further queries or doubts, MSME entrepreneurs can give a missed call at 080-68264454 and talk to Kinara’s in-house customer support team.