Working Capital Management – Achieving Higher Profitability

CONTINUED FROM LAST WEEK

Electronic invoices speed up the process of sales, receivables, and receipts. The delay in sending invoices adversely impacts the collection as there can be extensive procedural formalities at the customer’s end. Hence, an electronic invoice can lead to enhanced collection processes. Dynamic discounting for the customers Cash discounts on the payment of invoices can lead to an early collection of the funds. Although there may be compromise on the net profitability, you need to balance between liquidity and profitability. (Taulia, n.d.) Conclusion Liquidity or cash flow management is one of the important aspects of analyzing business performance. Generally, financial performance is assessed with profit/loss. However, that’s not a comprehensive metric on which to justify all of the decisions of a business. There is a need to analyze working capital management and ensure the working capital cycle is completed in as short a time as possible. Your working capital cycle can be shortened with certain steps. These steps include but are not limited to analyzing product profitability, optimization of the production processes, enhancement of the gross profits, and improving marketing efficiency. Likewise, additional steps include cash flow forecasting, sending digital invoices, dynamic discounting, etc. I hope you enjoyed the read. Hit me up and let’s keep the conversation going! I read all the feedback you send me. Also, feel free to throw at me topics you’d like to read or hear my thoughts on. You can always head to my Calendly to schedule a quick chat by going to calendly.com/maxwellampong. Or connect with me your way through my Linktree: https://linktr.ee/themax. These are all facts. And this has been an opinion piece. Have a blessed week!