Tag: Working Capital
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Working Capital Management – Production and Sales Flow
There is no single management style to address the multitude of working capital cycles existing in the various business sectors and the underlying industries. Taking raw resources and turning them into consumer goods has different time frames depending on the item produced.
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Bookkeeping – Controlling Cash (Lesson 48)
In small business, cash is almost always the number one issue. There is simply never enough. This is primarily attributable to growth. Growth requires both physical assets to produce more and expansion of accounts receivable. Technically, the expansion of accounts receivable is the economic equivalent of lending cash.
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Bookkeeping – Cash Disbursements (Lesson 45)
Cash disbursements is the process of remitting payment to vendors, suppliers and third party contractual obligations. Better managed offices pay bills in regular cycles including weekly and monthly obligations.
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Bookkeeping – Accounts Payable Management (Lesson 43)
With small business, the biggest heartache for the bookkeeper is addressing the daily phone calls and letters (bills, statements and notices) related to purchases. Vendors regularly communicate with the accounts payable manager wanting to know payment cycles and status of their respective account.
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Working Capital Cycle
The college textbook definition of working capital is current assets minus payables and accrued expenses. The term explains the dollar value of flexibility a business operation has to take advantage of immediate opportunities or endure sudden or long-term setbacks. Since it is a balance sheet based formula the value is a function of a moment…
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Gathering Data from Sales
In business the best source of new business is the existing customer. Discovering the customer’s habits and characteristics allows the sales department to expand into new geographical territories with similar customer characteristics and/or modify the existing product lines. The key to success is gathering the proper information at the point of sale.
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Replacement Reserves- Understanding the Fundamentals
Long and short term housing rental businesses use a financial operations tool to maintain, repair and upgrade the physical facilities. This tool is known as replacement reserves in the real estate industry. In almost all cases it is a contractual agreement requirement between the mortgage lender and the borrower.
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Working Capital Management – Fundamentals
Working capital management is a function of finance whereby management ensures adequate cash is available to meet operational needs over the typical working capital cycle.
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Working Capital
Cash is the lifeblood of every business. Without cash a business operation can come to a standstill. Cash is one component of working capital, a term referring to current assets (Gross Working Capital) less payables and accrued expenses.