5 Tips To Manage Working Capital for Your Manufacturing Business
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5 Tips To Manage Working Capital for Your Manufacturing Business

  • Highlights

  • Pay suppliers on time to foster good business relationships

  • Maintaining optimum levels of inventory is crucial

  • Develop an efficient payment collection system

  • Choose a Flexi Business Loan to help in times of need

Managing working capital is crucial to the long-term financial health of your manufacturing business. In the current fiscal landscape, proper management of working capital is vital to sustain a healthy cash flow.

Here are 5 tips to help you effectively manage working capital for your venture.

Pay Suppliers on Time

A disciplined payment to suppliers and vendors helps you foster strong relationships with them. Thus, you stand on ahealthy ground to negotiate better deals and discounts. When you keep your suppliers happy, you can bag large concessions on bulk buying and recurring orders. It maximises the credit period and saves money.

Paying your suppliers on time makes them more flexible when it comes to prices. It will also help you build your brand value in the market.

Constructive Inventory Management

Prudence in inventory management is one of the fundamental pillars of effective management of working capital. It's important to note that while maintaining optimum levels of inventory is crucial, over and under maintenance can take a toll on your working capital.

Inventory levels beyond demand result in cash outflow for maintaining them. On the other hand, because of under inventory, you may experience a shortage in sales, affecting your revenues.

Hence, as a businessperson, it's vital for you to periodically check inventory levels to address overstock and under-stock issues

Have an Efficient Collection System

An essential aspect of any business is to develop an efficient collection system. Send out invoices as soon as possible to cut delays in payment. Deploy technology for electronic delivery of invoices to bolster the process of billing and collection.

Don’t wait until the end of the month to send invoices to your customer. Do them as soon as you sell your goods or services. Thus, you can shorten the cash inventory cycle. Also, make sure that the invoices are accurate to avoid delay in payment. It's a good idea to send periodical reminders to your customers regarding payment.

Do follow up on a regular basis to make sure you receive your payments on time. The cost of chasing customers for payments can be a tightrope walk that can put your existing finances under pressure.

Benefits of Working Capital Finance for your Business

The life cycle of working capital

Working capital is the life blood of any small or medium sized enterprise. Without adequate funds to keep the business’s day to day operations running, the business can falter in its commitments to clients. Therefore, knowing what a working capital cycle is, and how to make the most of it, is essential for any business owner. Here, we tell you how to determine the working capital cycle of your business, and how you can speed it up.

The life cycle of working capital

Discount with Care

While customers expect big discounts, doing so for an extended period can affect your working capital. Make sure your dealers know the limits of what and how much they can offer. Analyse the cost of production of your product and instruct your dealers accordingly. Update your accounting packages to integrate the ongoing discount and keep meticulous records.

Additional Read : How A Flexi Loan Is the Ideal Way to Meet Your Working Capital Needs

Choose Flexi Business Loans

Flexi business loans can aid you to effectively manage your working capital by giving you access to immediate credit. With the help of these loans, you can:
- Balance credit crunch due to delay of payments:
- Buy new equipment:
- Expand funds:
- Buy fresh stock:
- Take care of day-to-day working capital needs
We, at Bajaj Finserv, offer Flexi business loans. These are tailored as per the requirements of the manufacturing business. Our Flexi business loans allow you to withdraw funds as and when required within your credit limit and repay when the funds are available. This scalable lending option syncs perfectly with your working capital requirements. Since the interest is paid only on the availed funds, it also helps you to keep your lending costs low. Talk to us now to know more about the features and benefits of our latest offering.

Additional Read : 5 Tips to Manage Working Capital for Your Trading Business

Effective Planning - The Key to Success

As a businessperson, you must determine your business requirements to analyse ways to manage your working capital. Your business requires finance at different stages to meet various needs. Working capital is the oxygen that keeps your business running with vigour. Meticulous planning and the ability to identify forthcoming exigencies go a long way in ensuring smooth management of funds.

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