Everything You Need to Know About Working Capital: An Infographic

From our friends at Sollertia:

‘Working capital’ is one of those phrases frequently used in business, but often misunderstood. With this in mind, we at Sollertia thought it was about time somebody put a really good infographic together on the subject.

What is working capital?

Put in its simplest terms, working capital is the money to which a company has immediate access. When valuing itself, a firm may include the land and property it owns, along with fixed assets like machinery. These have value of course, but the cash is locked up in them, so getting access to it would take time and involve major changes.

Calculating working capital means weighing up your current assets against your existing liabilities. It might sound complex, but the infographic gives the lowdown on how you should go about this, and what you should and shouldn’t include.

What working capital trends have been identified?

According to a 2014 survey carried out by REL Consultancy, some positive news is emerging from studying the working capital of large firms. The cost of goods and the amount of total debt have dropped for a start, and free cash flow has jumped by more than 8%.

Companies still have a lot to do when it comes to working capital management though, as a whopping £720bn could be saved through shrewder practices. If you find that amount hard to visualise, the infographic can help you out!

So how do I boost my working capital?

We’ve picked out six key routes to having healthier working capital at your disposal:

  • Keeping close tabs on you cash flow ratio
  • Using a savvy collection system
  • Finding marketing avenues to boost sales income
  • Encouraging your clients and customers to pay in full and on time
  • Careful management of accounts payable
  • Exploring possible tax breaks


Courtesy of Sollertia

Soilertia

Recent Posts

3 Ways to Help Your Business Operate More Efficiently

It’s easy to get into the daily grind of business operations and get caught up…

1 week ago

The Importance of Building a Team: Why You Need the Right People

Everyone has great ideas. Lots of people even have a great product. But the difference…

1 month ago

Digital Marketing Strategies to Help Your Business Win in 2025

With every new year comes new challenges and new opportunities for your business. 2025 is…

1 month ago

Understanding New Tax Laws and Regulations

There have been many articles and news outlets discussing the change in tax laws and…

2 months ago

Articles of Incorporation vs. Articles of Organization: What’s the Difference?

The incorporation process requires filing certain documents. This paperwork allows entrepreneurs to form a corporation…

2 months ago

How to Hire and Keep Great Employees: Our Hiring Guide for Business Owners

You can’t scale a business without employees. And you can’t operate effectively unless you have…

2 months ago