Working capital is something that is scrutinized by almost every company but rarely talked about in the collision industry.
But I guarantee that every large MSO in your marketplace is actively managing working capital. It is also something that major vendors will consider if you are negotiating for a pre-bate or other consideration for purchasing their product.
Banks look at it too. If you want to borrow money to grow, they will scrutinize working capital to ensure that you can afford the loan. If you ever sell your business, it will be a hotly negotiated topic as well.
Most business owners do not look at working capital until one of the above situations forces a working capital negotiation. But that is the wrong time to start managing working capital. It is like going on a diet the week before your annual doctor checkup.
Understanding working capital will help you better manage your business, better manage your cash flow, and better manage both vendor and customer relationships. It will also help you better position your business for growth, acquisitions or for sale. Continue reading here.
Subscribe to ABRN and receive articles like this every month…absolutely free! Click here to subscribe.
