Growth CircleHow SMEs Can Improve Working Capital
Practical ways to release cash tied up in receivables, inventory and payables without hurting relationships.
Working capital is the cash needed to run day-to-day operations. When it is tight, even a profitable business struggles.
Collect faster
- Invoice promptly and accurately.
- Agree payment terms in writing and follow up before the due date.
- Review the ageing list weekly and escalate old dues.
- Consider advance or milestone payments for large orders.
Manage inventory
- Identify slow-moving stock and decide whether to discount, return or stop buying it.
- Order based on actual demand, not habit.
Use payables sensibly
- Pay on agreed terms rather than early or very late.
- Negotiate better terms with large suppliers where possible.
Watch tax cash
- Reconcile input tax credit so it is not lost or blocked.
- Plan for GST, TDS and advance tax dates in your forecast.
Measure it
Track receivable days, inventory days and payable days each month. Small improvements in each release meaningful cash.
Need help with this? See our MIS & Reporting service or book a consultation. This article is general information, not advice for your specific situation.
More to read
Talk it through with us.
A short conversation is often enough to find the next step.