When you have sufficient working capital, you can use it to grow the business rather than merely staying ahead of your loans and other obligations.

Here are some of the most common uses of working capital loans and reserves:

• Purchase inventory before the busy season in your industry
• Hire and train additional staff in time to train them before business picks up
• Help you pay your taxes without depleting your working capital
• Adding equipment and technology to your business to increase productivity and overall performance

Benefits of Maintaining Adequate Working Capital

• Having adequate working capital benefits businesses in many ways. First, it ensures you’ll be able to continue operating without interruption. That’s because having enough working capital guarantees that you won’t run out of cash in the short-term.
• Paying for supplies or raw materials and meeting payroll are non-negotiable operating expenses, so having sufficient capital helps you maintain the reputation and goodwill of your company.
• You need sufficient capital to buy in bulk so that you’re eligible for discounts. It also ensures that you can ramp up quickly if sales pick up suddenly. The alternative is leaving money on the table and losing valuable opportunities. Sometimes, the best solution to a cash crunch is to shop around for short-term working capital loans.