SME Business Financing: A Solution To Working Capital Management
What Does Working Capital Management Mean?
It is common for businesses to have different sources of income. What comes next is for you to establish efficient management of the sources, so that they can work wonders when running your business.
While startup capital and fixed assets are typically long-term, for the day-to-day running of your business, an efficient cash flow structure is necessary. Hence, making working capital management crucial, especially for small business owners.
What Is It All About Then?
Basically, working capital management is the relationship between a company’s short-term assets and short-term liabilities. In simpler terms, it is the way in which a company handles its income generation and expenses.
Take for example;
If your F&B company deals with a lot of paperwork and you need physical copies of every document, this is then, an active expense happening almost every day. Getting an office printer would make the expenses considerably less over the course of time.
Efficient working capital management ensures that any company can run smoothly while being able to repay maturing short-term debt and expenses that might arise in the near future.
In working capital management, the most basic tasks revolve around managing inventories, account’s receivable and payable, and cash.
Inventories in our example here can be ink cartridges or blank paper that can be used in the future.
While your sales on credit can be a part of account’s receivable, if the printer was bought through a loan, the equated monthly installment (EMI) would be a part of the account’s payable.
Cash is pretty self-explanatory and is basically used for expenses that can’t happen on credit or are quite small in amount.
Why Is It Important?
Efficient working capital management is an important component of sustainable growth. If your company runs out of money to run your day-to-day expenses, your production of wares and services will eventually stop.
In these instances, your business may eventually fail to cater to your existing customers and henceforth, fail to acquire new ones as well.
To restart production, you may then tap into your company’s capital. Yes, while this action may offer a temporary solution, it will affect long-term stability by jeopardizing asset, equipment acquisition, and maintenance.
Therefore, it is important to have a working capital management system in place, where you can realistically asses your company’s working capital requirements, hence, giving you enough time to come up with a solution.
Generally, working capital management also helps businesses to streamline processes, cutting down sundry expenses, and reduce the cases of theft and fraud.
Why Do You Need It?
Dropee is a one-stop business-to-business (B2B) eProcurement marketplace aiming to transform the way businesses buy and sell across the supply chain.
Dropee’s platform connects suppliers with small-to-medium enterprise (SME) business owners in real-time by streamlining the order fulfillment processes and facilitating bulk purchases through a suite of enterprise solutions.
Suppliers and brand owners work directly on Dropee.com to upgrade their existing operational process to become more efficient, agile, and customer-focused.
Leveraging on Dropee’s technology, companies are able to maximize fulfillment output and deliver a great customer experience, resulting in new customers and increasing order volumes.
Dropee’s unique value proposition makes it easier for businesses, both big and small to manage their procurement and supply chain ecosystem.
Our offerings include:
Automated order placement to reduce stocking issues
Digitalized documentation, such as auto-generated purchase documents and cloud storage accessibility, which reduces human error and eliminates inefficiencies
Tools to easily compare suppliers, prices, and products, all on one single platform while simplifying the decision-making process through greater transparency
Purchase and product tracking across the supply chain in real-time
Suppliers can customize customer’s access to specific product ranges, prices, and promotions based on set-criteria
Information/ bulletin system that allows suppliers and customers to disseminate and receive the latest information on suppliers, products, and promotion announcements on a centralized dashboard.
SME Business Financing by Dropee
A collaboration between Dropee and Grab Finance, powered by our P2P financing partner, Dropee introduces a working capital solution for you to manage your business cash flow better.
Through SME Business Financing, you can get up to RM 200,000 with zero collateral and minimum documents required.