Working capital is the lifeblood of any salvage yard. It’s the money you need to cover day-to-day expenses and invest in growth. Efficiently managing your working capital can significantly impact your profitability. Understanding the components of working capital is essential.
One of the most effective ways to maximize working capital is to improve your inventory management. Avoid overstocking on items that don’t sell quickly. Implement a system for tracking inventory and identifying slow-moving items. This will help you free up cash that’s tied up in unsold inventory.
Another crucial aspect is managing your accounts receivable and payable. Negotiate favorable payment terms with your suppliers. Offer incentives for customers to pay their invoices promptly. By optimizing these processes, you can improve your cash flow and boost your working capital.
