Working Capital Management Helps Enterprise Marketing

Generally speaking, the delay in payment is more beneficial to the enterprise. However, because the delay in payment may cause the deterioration of the reputation of the enterprise, the enterprise must make a careful decision and select the most advantageous scheme for the enterprise after comparing various options.

Working capital management and improving the efficiency of fund utilization are important means for small and medium-sized enterprises to benefit from management. In order to effectively manage the working capital of small and medium-sized enterprises, we must study the characteristics of working capital so as to manage them in a targeted way.

Tsing Shui Liang, a family business management expert at the private enterprise research center of the Yangtze River Delta Research Institute of Tsinghua University, believes that the working capital of enterprises generally has the following characteristics:

First, the turnaround time is short.

According to this feature, working capital can be solved through short-term financing.

Second, working capital such as inventory, accounts receivable and short term securities is easy to cash in, which is important for enterprises to cope with temporary capital needs.

Third, quantity fluctuates.

Current assets or current liabilities are easily affected by internal and external conditions, and the fluctuation of quantity is often very large.

Fourth, the source is diverse.

The demand for working capital can be solved either by long-term financing or by short-term financing.

Only short-term financing includes short term loans, short-term financing, commercial credit and discount of bills.

An effective way to reduce the proportion of working capital in total turnover is to accelerate the circulation of money funds.

According to the cycle time of money capital turnover cycle, the demand for floating capital can be predicted.

For example, enterprises use monetary funds to buy raw materials, raw materials are processed into finished products, and a part of finished products, and enterprises immediately change into monetary funds through the current marketing channels; while other finished products, enterprises are converted into accounts receivable through the channels of credit sale, and accounts receivable take a period of time to collect money into money.

Through the above discussion, we can see the impact of the operation of enterprises on the investment of monetary funds.

Zeng Shui Liang, a private enterprise management expert of the private enterprise research center of the Yangtze River Delta Research Institute of Tsinghua University, believes that if enterprises spend a longer time on the finished products, the enterprises will have to increase the investment in monetary capital.

From raw material to material

The time needed to complete the product sales is called the inventory turnover period.

It is the sales strategy of an enterprise that brings about another influence on the investment of the monetary capital by the operation of an enterprise. If the enterprise sells products by selling the products, the enterprises do not need to retain a lot of money, but if the enterprise has a credit paction, it will need to invest more money.

Because there is a problem of receivables turnover.

Of course, enterprises can also purchase accounts in arrears, that is to say, enterprises have to postpone payment, if the account can be owed for a long time, then the demand for money investment will be reduced. This delay payment time is called the extended accounts payable turnover period.

Achieve reduction

Management must start from three aspects: inventory management, accounts receivable management and accounts payable management.

Zeng Shui Liang, an expert in the management of private enterprises, thinks that

On the one hand, we should strengthen sales, reduce inventory turnover by increasing sales; on the other hand, we should calculate the economic lot size by determining the ordering cost, purchasing cost and storage cost, and control the capital occupied in the inventory to minimize it.

For accounts receivable management, on the basis of credit risk analysis, enterprises should formulate reasonable credit standards, credit conditions and accounts receivable policies. Through these measures, customers can be encouraged to deliver money as early as possible so as to speed up accounts payable turnover.

In terms of capital management, there is also a "misunderstanding" which is easy to appear. That is, capital management is outward expansion, that is, corporate mergers, that is, financing to society, or even turning to private high interest loans. In fact, these are not real capital operations but speculative gambling. At this stage, the capital operation of small and medium-sized enterprises is to sell some of the assets which are not bad assets at high levels of gold and to adjust the business strategy of enterprises.