What are the best ways of getting working capital funds? Can you tell the answer
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Hello Reader
How are you doing?
Hopefully, you will be fine and doing well. Last week you learnt about the management of working capital. You are aware of the best working capital management strategies. While managing working capital if you or your manager face shortage of funds for working capital. How would you solve this issue? Can you suggest any helpful source of getting WC funds to your manager? Do you know how to get the working capital?
You should know how to get the required working capital. Let’s dive deep into it.
This week’s “Accounting Guide” is about the ways of getting working capital
Concept description
Steps to getting working capital
First, determine how much working capital do your company need.
Calculate how much working capital will you manage and how much funds do you require. You can find it by seeing the working capital ratio if you have lower or less than 1 ratio. It means there is a shortage of funds.
There are many ways of getting working capital funds. Different ways are acquired by different businesses. Some of the best ways are:
Trade Credits are attained from the creditors. In simple words trade credits are the time taken from creditors more than credit terms.
Invoice Factoring is the process of selling un-received invoices at a lower value than its face value.
Invoice Financing is slightly different from invoice factoring. In this company sell its un-received invoices and receive the payments from customers at maturity too.
Business lines of credit are the agreed amounts of credit. A company can borrow money any time when it needs.
Business Credit cards are also used for getting credits for working capital.
| Best Ways of Getting Working Capital |
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Hira Aziz
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