How to Increase Working Capital

February 21, 2016

In-the-news

For any type of company, working capital is the foundation of a healthy business.

Learning how to maintain and generate more cash for your company is crucial for success. Working capital is essentially the cash needed to operate day to day. When this supply gets too low, the company minimizes opportunities for growth in new business. Here are a few strategies for construction companies to increase their working capital and free up cash to improve their working capital.

Refinance Fixed Assets

Entrepreneurs pursue construction equipment financing in MN as a means of opening up cash flow. Setting up a new loan structure with a financing company can help you reshape the amount of cash you are paying out each month. Changing the payment period, terms and interest rates can help to reduce the strain of extravagant monthly payments, freeing the construction company up for new ventures and daily expenses.

Sell Assets

Equipment is what makes any construction job possible. They are necessary, but it may be better for your company to sell their equipment or machinery. By releasing these assets to a construction equipment financing company, you will be able to free up debt and still maintain the right to use the machinery. This changes the asset from a debt to an expense, ultimately freeing up your capital line. This is a great option for businesses that have limited capital or who need updated equipment every couple of years.

There are many benefits that come from freeing your company of these kinds of assets. They cut down on initial expenses, and leased equipment likely doesn’t require a down payment. Plus, leases are tax deductible as a business expense…shrinking the lease’s net cost. Leases tend to have more flexible terms than loans when it comes to purchasing equipment. This is a lot of help if you have bad credit.

From refinancing to selling, both ways are practical strategies to help a construction company free up working capital. This will give your company more equity. Having cash on hand to take care of daily expenses is what will make your business succeed in the short and long term. This allows the company to take advantage of new growth opportunities to become even more profitable. Construction equipment financing companies want to help your business prosper for years to come.

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