Скачать или смотреть How working capital impacts business growth and valuation

A high working capital requirement can hamper a company’s ability to finance growth and lower its potential selling value.

Companies that first receive payment from customers and then use it to pay for the products or services that they offer are said to have a negative working capital necessity — like a SaaS company that receives cash up front and then pays for the server space or cloud hosting required to deliver a product.

This is desirable to buyers as it means that working capital will not be a constraint to growth.

On the other hand, consider a staffing company that is contracted to be paid at the end of a 90-day cycle but has to float payroll and other expenses in the meantime.

These expenses add up to be a significant constraint to the company’s growth.

Investment groups understand this, which is why it’s so important for business owners to understand the flow of working capital in order to attract potential buyers and maximize valuation.

Watch the video for more information on how your working capital can affect the value of your business.

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