Small businesses require substantial operating liquidity on any particular day. Working capital is an important metric, without which no small business endeavor related to manufacturing or production can bear the brunt and succeed. A company has available fixed assets.

The floating operating capital is considered as an important factor that fits the equation and evolves as an integral and important part of a company’s functioning. If the net current assets available with a company is lesser that the net liabilities on the company during a given year, then the company is termed to be suffering from inadequate working capital or working capital deficiency.

Working Capital Deficit

Small businesses suffering from working capital deficiency find it difficult to extend its business endeavor to subsequent stages of growth. Working capital finance is thus a requisite for small businesses. It helps relieve the cash-strapped strain and helps regulate the existing cash flow in a better and prolific vein.

Capital finances may be short term or based for longer duration of time. Either way, many cash related issues get resolved and available capital can be used to start-up businesses, fulfill a myriad of purchase orders, expand facilities and carry out thorough contract obligations.

Small business endeavors, proprietors, and partners should comprehend the various types of available working capital finance, which are crucial for reducing the deficit and make business easy. On the basis of types, working capital finance can holistically be sub-divided into seven key categories. Whether for shorter duration or longer, working capital financing helps in jettisoning worries and woes easily and quickly.

Accounts Receivable Financing

This is dubbed as A/R Financing and also commonly known as asset-financing. By this methodology, small or medium level companies can put their receivables as collaterals. Thus, borrowers can draw some finances or funds at a certain percentage of the valuation of collateralized receivables, as per financial agreements.

This looks profitable in the company’s perspective. It can easily free up capital. Moreover, by the virtue of A/R financing, companies can easily get back the day-to-day business proceeds and thus merely concentrate on producing and delivering goods and services rather than going about collecting receivables.

Purchase Order Financing

This has an acronym called P.O financing that is a short term finance based arrangement, with hardly any interest charged. Any lender availing PO Financing provides the funds notched up to the business endeavor to ensure quick and ease validation of purchase orders for single or multiple customers, including government agencies and national retailers.

The PO Financing arrangement shall enable the lender to look closely towards the credit rating of the borrower and see if the latter has a good repayment record. Further, it shall be comprehended whether the latter pays bills on time or has sufficient finances for ordering goods. Small businesses availing PO Financing receive substantial help.

Production Financing

It is a ready option for manufacturers needing substantial capital for expansion of facilities for producing goods. The borrowers are evaluated, documents collected holistically and offered secured loans. The loans offered are primarily for the ready purchase of new or already used equipment or for carrying out expansion of facilities. The lenders offer borrowers with sale lease-back options and provide a plethora of opportunities for financing industrial projects. The debts can be easily paid back; the repayment may conform to cash flows drawn from new business opportunities.

Contract Financing

This is also a pretty good solution for all small business ventures that have contracts with customers locked in and thus are in regular need of working capital, especially during period of deficits. By this process, lenders provide borrowers cash in advance on the basis of the latters’ work contracts with the customer base. The funds are used on a regular basis for day-to-day operations and functioning of business endeavors. The funds may be obtained before payments on the basis of work contracts start kicking in.

In general, a myriad of small companies prefers to seek for contract financing. This is beneficial when the company enters into valid contracts with customers or clients of valuation much larger than any prior engagements. Moreover, they should have a need for immediate capital in order to satiate the contract, adhering to the terms and conditions. The contracts also suffice prevalent business obligations.

In contrast to other forms of financing for small or medium enterprises in need of working capital, contract financing is particularly beneficial for small business enterprises, endeavors or proprietorship. Contract financing is helpful in getting a service completed, not eventually before any product is complete. This has been rated as one of the most useful financing options for firms suffering from working capital deficit or lack of funds.

Bank Overdraft

A customer having fairly good credit score can easily avail bank overdraft. However, the maximum credit that can be availed or the percentage of overdraft against collaterals depends entirely on the total relationship value of the customer and the rapport with the branch head. The borrower doesn’t quite take a loan. The payment needs to be made as interest for only the amount that is overdrawn. The rates depend on the ones settled by the bank.

Trade Creditor

This is a kind of loan provided to potential suppliers requiring capitals on an urgent basis. The suppliers offer trade credit that facilitate in dealing with the bulk orders placed from their units. A trade creditor will summarily evaluate and thoroughly check on the credit history of any company, analyze and assess various parameters before choosing to provide substantial credit to the customer.

Equity Funding

This is another type of loan obtained from friends, home equity loans or family members, i.e. personal resources. This is ideal for a myriad of companies starting up small endeavors. This is a practically feasible loan facility, especially if the company is new or has no or bad credit history.

Getting figured out your company’s financial transactions is a difficult task therefore many small and medium sized firms opt for Bookkeeping outsourcing services. The process involves the following essential steps

• Recording essential business transactions.
• Storing the selected ones.
• Retrieving financial transaction.

In this competitive environment most organizations get trusted Bookkeeping outsourcing services for them, rather than going for an in house process. Hiring such services enable company’s focus on their fast expanding business.

Another advantage is company’s get these services at affordable prices. Rather than hiring a full time employee gives this important job in the hands of dedicated professional is for what companies look for. Not only companies save annual salary but also save the cost of training, management and other overheads.

Bookkeeping outsourcing services are practical in every way, suppose a small or medium sized business firm has a complicated financial system or they might require effective and updated information on day to day bases. Employees working in such organizations are dedicated and talented having years of industry experience. Some relevant characteristics of a benevolent and result oriented service provider include.

• Have sufficient years of experience in accounting and bookkeeping tasks. Industry specific experience is for what companies look for.
• The firm should provide flexible services that are being personalized to meet your company’s growing needs.
• The company should be proactive in all respects; it should facilitate you by giving streamline services at an affordable price.

If the above conditions are fulfilled effectively by any service provider than your organization has a definite potential to become one of the best money making venture.

Are you a small business owner and wondering what outsourcing your bookkeeping and finance related services will do to your small business? We have an answer for you; there are several benefits that come with outsourcing your bookkeeping which we will definitely discuss in this article.

-Benefits of outsourcing Bookkeeping

Well, they say, first things first. It is important that you understand first what really outsourcing means to your small business. Outsourcing is the contracting of a specific business process, which in this case is the bookkeeping and accounting services, to a third party which can professionally handle such services.

For instance, it is certainly needless to say that if you are a small business looking forward to outsource your finance and bookkeeping services, Bookkeeping Monster India is literally one of the preferred outsourcing bookkeeping partners to talk to. Bookkeeping Monster offers the best outsourcing services tailored for small businesses.

More and more businesses are deciding to outsource their bookkeeping services because of the following advantages that come with it. They include;

Time efficiency – bookkeeping in itself can really take up your time because it is a time consuming role, in particularly for a small businesses. As a result, outsourcing this service will definitely create more time for you as a small business owner you can use this time to do other business activities in order to grow it.
Experts – Your job is made easier by the experts who will take care of your bookkeeping services in the most professional manner possible.
Better results – when outsourcing bookkeeping services in your small business, you leave all that work to a group of people who are able to literally turn the tables even when your business is basically on a downhill trend. In other words, experts from bookkeeping outsourcing companies such as the Bookkeeping Monster India will, beyond any reasonable doubt, bring your small business exemplary results.
Reduced costs – there is, definitely, the cost incurred by the small business owners in getting a third party to do the bookkeeping for them. But if it is compared to the advantages that come with this outsourcing process, it is no longer comparable. A good outsourcing company will offer you plans and strategies that will help you achieve your business goals or even expand it and cut the costs of operating your small business.
Access to more tools – did you know that when you outsource your bookkeeping services, you get access to more and better tools in the industry? That is right. Your business will be handled in the best tools that the market can offer such as the best accounting software to mention but just a few. At times, buying such tools or software can be costly keeping in mind that you are a small business.

The above mentioned are just but a few of the many benefits that bookkeeping outsourcing can undoubtedly bring your small business. There are many more. Nonetheless, in order to enjoy these benefits, you must choose to consult seasoned professionals such as Bookkeeping Monster India.