Trading businesses live and die on cash flow. Stock and buyer credit tie up money, and running short stops you buying the next order. Here is how to keep working capital healthy.
Your money sits in two places: stock on the shelf and credit you have given buyers. The longer goods sit unsold and the longer buyers take to pay, the more cash you need just to keep running.
Sell stock faster, collect from buyers sooner, and negotiate longer terms from suppliers. Every day you cut between paying for goods and getting paid for them frees cash you can put into the next order.
If you give buyers 30 days but pay suppliers in 15, you fund the gap yourself. Line up your payable and receivable days so your terms roughly balance, and the business funds more of its own growth.
Hold a cash reserve for slow months and unexpected costs. Running with no buffer means one late payment forces you to borrow at a bad rate or miss an order, both of which cost more than the reserve.
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