How to increase working capital

To maximize profits, enterprises invest in working capital in various long-term objects of financing. Therefore, in the implementation of vigorous economic and economic activities, organizations may not have enough free financial resources to further support current activities, since money is involved in the project at this time. In this case, it is necessary to organize an effective search for additional sources of working capital.

You will need

• - long-term leasing agreement;

• - Bank loan agreement.

Instruction manual

1

Calculate the amount of cash necessary for the continued successful implementation of entrepreneurial activity. In this case, it is necessary to remember the creation of a reserve working capital fund for instant cash operations, which managers often encounter in the course of financial and economic activities.

2

Define the terms for which you can return the borrowed working capital, if you decide to replenish working capital through bank or trade loans. Depending on the maturity, as well as lending parameters, loans for business entities are divided into: overdrafts, short-term commercial loans, express loans and trade finance. Overdrafts are borrowed funds in the amount of 2-3 average monthly balances in your current account. There are several varieties: unsecured overdraft (without collateral), overdraft line (with a renewable limit) and short-term loan for incoming transfers. The interest rate on this credit line on average ranges from 30 to 36% per annum. The interest rate on short-term loans for incoming transfers is 10-15% per annum. Trade financing is an advance payment by a bank of delivered goods, work or services for the provision of documents from a supplier. Trade financing is divided into financing: import letters of credit, export letters of credit and letters of credit of compensation.

3

Attract additional working capital through the provision of long-term leasing services. In this case, the objects of leasing may be: machinery, equipment, machinery, buildings and structures. For using the leased asset, you, as the lessor, will be remitted with a constant payment in the amount of the amount specified in the long-term leasing agreement.

4

Consider additional sources of working capital replenishment, such as: making a profit from an additional issue of shares, attracting additional shares, and also returning receivables.