- KredX Editorial Team
- 12 Apr 22
- Working Capital

To run a business successfully, entrepreneurs must have sufficient working capital. Working capital refers to the cash available to a company after repaying the current liabilities. Businesses require working capital to purchase inventory, hire staff, pay salaries, and complete other essential tasks.
Though large-scale businesses can easily gather cash, in case they fall short on working capital, the small businesses suffer the most. Several reasons account for such working capital troubles for small businesses. This piece primarily focuses on the reasons or working capital challenges a business faces; read on.
To retain customers, small businesses usually offer an extended credit line to them. If the amount of such customers is high, then naturally, the working capital of a business suffers. Businesses must create strict credit and debt collection regulations to improve working capital.
Businesses in need of instant cash can opt for Invoice Discounting, a major source of working capital finance. Reputed financial solutions providers like KredX offer Invoice Discounting against unpaid invoices. Here, businesses have to pledge their unpaid invoice as collateral, and once investors purchase their invoices, they will receive money in 24-72 hours, solving working capital challenges.
Working Capital Challenges For Business
It is a well-known fact that in the year 2020, the e-commerce segment and online shopping rose to popularity. Though this segment is invading most business activity, they hardly get the chance to avail credit facilities from traditional banking sectors. As per a report, only 13.5% of small businesses were able to secure funds. The statistic is enough to reflect the working capital issues small businesses have faced for decades. Reasons for these traditional banking sectors not offering credit facilities to budding businesses are as follows:- Weak Cash Flow
- Poor Inventory Management
- Poor Sales Performance
- Previous Due Receivables
To retain customers, small businesses usually offer an extended credit line to them. If the amount of such customers is high, then naturally, the working capital of a business suffers. Businesses must create strict credit and debt collection regulations to improve working capital.
Businesses in need of instant cash can opt for Invoice Discounting, a major source of working capital finance. Reputed financial solutions providers like KredX offer Invoice Discounting against unpaid invoices. Here, businesses have to pledge their unpaid invoice as collateral, and once investors purchase their invoices, they will receive money in 24-72 hours, solving working capital challenges.
- Late Payment To Inventors