Working capital management for small business – how we use Xero to help you predict future cashflows
Working capital defined
Working capital can most easily be defined as the liquidity-on-hand that businesses have available for daily operations and can often be the key to success. The amount that working capital should total is calculated by taking the sum of the business’s current assets and deducting its current liabilities. Having the correct working capital available for your business helps create business health, which leads to growth.
This capital can assist with activities such as buying stock, settling payroll responsibilities, and maintaining needed utilities. When owners rely on credit to handle the payment of these processes they can often fall into unnecessary debt that will harm success.
Since working capital is such an essential part of everyday business processes, it is best to keep track of how much working capital your business may need. This can be done with excellent forecasting and management through Xero outsourced accounting so that your business is never caught off guard.
The Float App, a top cash flow forecasting add-on for Xero accounting, allows users to easily make sense of how much capital their business will have in the future. The efficient and accurate data that this add-on produces can help owners make informed and data-driven choices for future operations. This excellent add-on offers our clients a live forecast that syncs with Xero to avoid having to conduct manual data entries.