Working Capital measures how much cash and cash equivalents (i.e. things that are readily convertible into cash) a company has available to maintain and build its business.
Typically this will consist of some or all of the following:
Stock + Debtors + Bank + Cash – Overdrafts – Short-term loans – Creditors (including V.A.T.).
Crucial to the success of any business is the efficient management of Working Capital to ensure that Working Capital Assets (e.g. Stock and Debtors) are converted to cash in hand and in bank income in good time to pay its Working Capital Liabilities (e.g. Short-term loan commitments and Creditors).
Prelude’s accounting core integrates with Business Processing modules to form a powerful Business Management Tool producing comprehensive Management Reports using real-time data.
For example, click the At-a-Glance button on the toolbar just below the Daybooks menu option in Prelude Desktop products or Overview on the main menu in Prelude Cloud to see the up-to-date Debtor, Creditor and Cash balances – a snapshot of Working Capital that is up to the minute and includes the latest transaction – see At- A- Glance.
A sound control framework and working capital management on their own will not ensure the success of your business, but without these a business is much more likely to fail.