Working capital is a vital part of the day-to-day running of any business. It’s the cash you use to do simple, yet important transactions. Like paying weekly wages or buying raw materials.

Even so, many thriving businesses actually find themselves cash poor. Having a working capital deficit can lead to many extra hassles that make running a business unnecessarily difficult. This means business leaders having to constantly worry about cash flow and, let’s be honest, who has time for that?

The simple answer to improving your working capital position is to collect payments from your clients as quickly as possible and pay your suppliers on the longest possible terms. If you can get this right, you’ll greatly improve your working capital. But what if that doesn’t do the trick? Maybe you need more help to get your boat flowing down the cash flow river again.

So what else can you do?

3 ways to improve working capital

Bank overdraft

Having a bank overdraft can be very useful. It acts like a loan that’s available when your bank account runs dry. An overdraft will allow you to access money fast, but the important thing to remember here is that it is still a type of loan. This means, you’ll be looking at interest payments and there will be a limit to the amount available.

Invoice finance

With invoice finance, a lender will give you an advance against your outstanding invoices. This means that you can get up to 90% of the money upfront, without having to wait for your clients to pay. You can get an advance against some – or all – of your invoices, depending on your requirements.

Unlike factoring, you’ll still have ownership over your client relationships and you won’t have to give up credit control.

Business loans

Borrowing money can be a difficult choice to make. On the one hand, borrowing can seem like the opposite of what you want. On the other hand, you need money to make money, and a business loan can be much more beneficial than you think. One of the fastest ways for you to boost your working capital is by an influx of cash through a reliable lender.

Let’s recap what we’ve learned

Working capital is essential for your business.

You can improve your working capital position through shorter payment terms with your clients and longer payment terms with your suppliers.

You can borrow or advance working capital through funding solutions like bank overdrafts, invoice finance and business loans.

With MarketFinance, you can choose whether to fund your business with a diverse range of invoice finance solutions or a flexible business loan. You could even use a combination of both, together in a single facility. Click here to find out more.