Turn financial stress into a plan you can actually follow

Working capital represents the short-term financial resources a business uses to operate. It connects cash, inventory, receivables and payables and therefore sits at the centre of daily business liquidity. A company can be profitable and still experience financial pressure if working capital is poorly managed. The basic relationship involves current assets and current liabilities. Cash, inventory and customer receivables represent important current assets, while supplier payables and other short-term obligations represent liabilities. The objective is not simply to maximise working capital. It is to maintain enough liquidity to operate without keeping excessive amounts of money unnecessarily tied up. Inventory is one of the most important areas. Excess inventory consumes cash and creates storage, handling and obsolescence risks. Too little inventory, however, can cause production interruptions or missed customer orders. Effective working capital management therefore requires findin...

Cash Flow Problems in Manufacturing: Why Profitable Factories Can Still Run Out of Money Manufacturing · Cash Flow Cash Flow Problems in Manufacturing: Why Profitable Factories Can Still Run Out of Money A factory can be profitable on paper and still face a serious cash shortage. Profit measures whether a business earns more than it spends. Cash flow measures whether money is available at the right moment to actually pay for it. GoMoneyVibe  |  Manufacturing Desk  |  9 min read Photo: Jakub Zerdzicki / Pexels There is a particular kind of panic reserved for the finance manager who checks the bank balance on a Thursday and realizes payroll is due Friday — for a company that just posted its best quarter in years. It sounds like a contradiction. It is one of the most common, and most misunderstood, failure modes in manufacturing. A factory can be profitable on paper and still face a serious cash shortage. Th...