DINEO TSAMELA: The intense job of managing a business's working capital
When it comes to managing a business, plenty of entrepreneurs focus on funding, but few integrate capital into their business effectively. This is why cash flow and working capital management are important to ensure your business runs smoothly. The saying "cash is king" isn't just about being able to pose on Instagram with a stack of money and a crown emoji. For entrepreneurs who work with inventory, managing your working capital is all about managing short-term obligations: business owners need to ensure that they have sufficient cash to carry out their daily operations. Business owners need to keep a close eye on their inventory levels, their short- and long-term debt obligations as well as the credit they give their customers. Central to effectively managing your working capital is to ensure there is a balance between the time it takes the company to pay for and receive inventory and the time it takes to sell the inventory. This is known as the cash-conversion or operating cycle,...
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