Maintaining Working Capital

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Once your business is funded and off the ground, you still need to make sure you have enough money to run it, invest in it and make it grow.

Positive working capital means having enough cash to manage operations and meet other obligations. If your business is established, it’s pretty easy to know how much cash you need to run your business, but it’s a lot tougher if you’re just getting started. You may need to use industry benchmarks and detailed projections to get a rough estimate of your working capital needs.

Then comes the tough part: making your bank account match that figure. Maryalene LaPonsie offers a few tips to help you manage your working capital and cash flow at Small Business Computing.

Just-in-time inventory is one way to go. Time supply shipments so they arrive just as you need them, but leave a little wiggle room to be safe, and have a contingency plan. This will save you the storage and upfront costs that come from stockpiling supplies and make cash flow smoother.

Invoice as soon as you can and request payment in, say, 15 days instead of 30. Request a deposit on large orders, and try to stagger payments to your suppliers if possible.

Plan for big expenses like upgrades, new equipment and expansion so those bills don’t hit all at once. And if your business has seasonally weak periods, set aside capital for those during the strong ones.

Adapted from Working Capital Tips for Small Business at Small Business Computing.


For any business working capital is very important. It gives the company a breathing space which it needs for sensible management decisions and for growing business.


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