What are the common resources of working capital?

The process of working capital management requires companies to create and cultivate different sources of this type of capital. This helps to ensure that the daily operation of the company can continue without any disturbance that would jeopardize the task of producing goods or services for sale. In fact, there are several different sources of working capital that will use and small businesses, when and as needed.

All sources of working capital are the most common selling and billing customers. Invoices for sold goods and services are prepared and handed over to clients who, in turn, apply these invoices in a reasonable period. This continuous cash flow provides for business funds to continue the production of its product products, which makes it possible to continuously meet consumer requirements.

Occasionally, another souk expanding income generation via sales will be NCBYetné rces of working capital. One approach is the use of the so -called sales and rent strategy. Here the asset, which is not considered necessary for the basic operation of the company, is sold to a third party, usually cash. At the same time, the terms of the agreement allow the company to rent this asset from the new owner, allowing you to continue using this asset for any purpose. With this plan, it will get a cash infusion and at the same time retain the ability to use this asset.

The use of corporate credit cards is also sometimes considered a source of working capital. Thanks to this application, the company uses the card to manage temporary deficiencies in cash flows. Companies that normally experience seasonal ascension and decreases in sale sometimes go in this way. Assuming that the interest rate is used for the balance is reasonable, this approach means that the access to backup capital, without the need to ensure any type of loan.

Some businesses choose someType of credit situation as a source of working capital. This may include a short -term credit arrangement known as micro loan . The balance is usually relatively small and is paid in a few months. Business can also decide to go with the credit capital credit line, which is a step that provides many advantages of using a company credit card as a source of capital, but sometimes carries a lower interest rate and more liberal repayment conditions.

For businesses that require the immediate return of their invoices, factoring is often a good choice. With this source of working capital, a creditor who is usually identified as a financing or factoring company, the percentage of the nominal value of invoices issued for a specific billing period proceeds in the company. This initial procedure is often in the range of 80%. Customers bring payment invoices directly to a factoring company rather than business. Since invoices for a given period are retired, the factoringo issuesThe company's second payment of the company, which covers the rest of the nominal value of these invoices, a less small percentage that is maintained as a service fee.