- Business and Employment
Working Capital Help
Working Capital Help for Business Owners
Working capital help is probably needed by most small businesses whether they realize it or not. A practical and candid discussion about common problems and effective solutions for working capital management is likely to be helpful for most business owners.
Because banks have largely been missing in action when it comes to routine working capital loans for small businesses during the past several years, much of the focus is on identifying working capital strategies to replace bank financing. When the conversation turns to replacing banks, reducing business debt and operating expenses should be a high priority.
How has working capital management changed?
Practical Solutions for Working Capital Financing Problems - Finding a Working Capital Expert
As the saying goes, "Help is where you find it." Whether small business owners realize it yet or not, the need for effective working capital management help is becoming more critical due to an overall commercial banking climate for small businesses that can best be described as "chaotic" and "confusing." Some very effective working capital help is available at no cost, and business owners should start any search for working capital advice by reviewing such free resources. But "free" is not the same as "best" or "effective."
In other words, such resources are not without their limitations. Due to the complexity of working capital financing combined with a confusing climate for commercial lending, the next step for commercial borrowers should involve individualized assistance from a working capital expert. How should business owners find a working capital finance consultant to help? One suggestion is to include the power of the internet and conduct a search for "working capital help" or "working capital expert."
Please be aware, however, that the Internet search process has become less dependable due to drastic changes by search engines such as Google and Bing. In particular, Google has periodically deindexed and devalued websites due to shifting algorithms.
Small business owners have more working capital management choices than they realize.
Since this article is about working capital help for small business owners, I want to ask for some help from readers in reporting (by way of the poll question below) whether you have experienced difficulty in obtaining needed working capital as well as other business financing. Because working capital can sometimes be used interchangeably with other forms of commercial loans, I am asking that you report problems (or the lack of such difficulties) in securing any critical form of business funding from your bank or other commercial lending source.
During the past four years, have you experienced problems with banks and other commercial lenders in obtaining working capital or any other form of business loan (such as commercial real estate financ
Business Cash Advance Strategies Are Not All The Same
Credit card receivables factoring can result in several undesirable working capital problems if executed improperly. Merchant cash advance programs are not all the same, and the differences are significant in many cases.
Working Capital Questions
- Why are banks saying "No" so often for routine working capital financing requests?
While the answer will differ from case to case, the primary conclusion is similar in most circumstances: new commercial lending sources need to be identified to replace banks as a reliable source of working capital.
- How will I know if I should fire my banker?
There is certainly not just one unique set of circumstances that will be a true indicator that a bank should be fired. But inability to obtain modest amounts of working capital from a bank is a critical factor to use when small business owners make this judgment.
- What are some sources of working capital that might be overlooked?
One underutilized strategy is to improve cash flow by reducing credit card processing costs. (See the "Credit Card Processing Improvements" comment below.) A second source of improving working capital cash flow is to consistently do a better job of business finance negotiating since this can have an immediate positive impact by reducing major expenses in at least eight critical areas.
Credit Card Processing Improvements
Businesses frequently fail to consider credit card processing solutions when attempting to improve their cash flow. Credit card processing help is a major component in working capital management improvements, especially in light of economic volatility for businesses almost everywhere. One of the potential benefits in achieving improvements to credit card processing is reducing outlays for one of the highest variable expenses with a business accepting credit cards.
Another Source of Working Capital: Improved Business Writing
An Overlooked Working Capital Strategy
An overlooked source of working capital: Do a better job of business finance negotiating. This can have an immediate positive cash flow impact by reducing substantial expenses in eight (or more) critical areas.
A Book That Should Help
Most small business owners do not have an adequate understanding of working capital financing and managing working capital cash flow. This book will serve as a practical tool for small businesses wanting to fill in their working capital knowledge gaps.
While some preliminary working capital help might be available at no cost or low cost, small business owners should not restrict their search for practical and effective working capital solutions by choosing the "low bidder." The availability and cost of working capital financing has changed significantly during the past 10 years. In such a chaotic financial environment, small businesses should not be satisfied with anything less than an experienced working capital expert to help guide them in both reducing debt levels as well as finding appropriate business funding when it is absolutely required.
Can you do this without banks?
Yes — and you should whenever possible.
This might be the most important lesson to be learned from this discussion — banks might be the problem rather than the solution.
Our high expectations for what banks will do are constantly met with one disappointment after another. In the early portion of 2013, the Washington Post used their best investigative journalism to unravel another despicable banking practice, this one involving the entry of several large banks into payday lending programs. Apparently annualized rates of interest around 300 percent (unfortunately you did read that correctly) were just too good for these bankers to walk away from, so they managed to find the funds to lend in this risky loan area. Isn't it interesting that they have money for payday loans while running short of resources for small business loans?
Too Big to Fail. Too Big to Jail. Too Many to Fail. Zombie Banks.
These are not exactly confidence-builders when discussing the current banking environment. We can all do better by moving forward from a problem to a solution.
The banks should have been let go.— Sheila Bair
© 2009 Stephen Bush