143 - Working Capital: What It Is And How You Should Use It
Do you want to double your business? The best place to start is with your working capital. Even if everything seems great and running smoothly, failing to account for working capital is a recipe for disaster! Join Martin and Khalil as they discuss various business scenarios to learn more about the nuts and bolts of the working capital game.
Show Notes
04:47 - What Does Working Capital Involve?
08:57 - Why it’s Vital to Understand Your Working Capital
14:12 - What to Consider Before Increasing Your Sales Target
16:20 - How to Calculate Your Working Capital - Let’s Do the Math!
18:03 - Day Sale Outstanding
15:28 - The Miracle of Having Good Books
20:15 - Financing Your Business Through Your Suppliers
Quotable Moments
“Working capital is the ebb and flow of money in and out of your business, principally through operations.” - Martin
“I think it's important to understand that growth is a big component of failing with working capital; where you are doing fine because you're operating at a certain clip, but then you decide you want to double the sales in your business. Well, that's when you can run into trouble if you don't have the working capital.” - Khalil
“Simple way to do it, add your receivables, add your inventory, subtract your payables. That's how much you need.” - Martin
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