Originally written by Partner Content on Small Business
If you run an online marketplace business, you’ll be familiar with the concept of working capital
Whether you have multiple listings on Amazon or a boutique store on Etsy, ensuring a steady flow of working capital is essential for long-term retail success. Marketplace sellers that find themselves short on cash will struggle to replenish stock, fail to fulfill orders, and see their product rankings slowly slip away.
But even for successful merchants, the task of maintaining adequate levels of working capital isn’t always easy. Unexpected costs relating to seasonal demand, spoiled stock, disrupted supply chains (yep, we’re thinking of coronavirus), late delivery and more can quickly add up. And merchants oriented towards growth face the added challenge of balancing medium and long-term investments with day-to-day costs.
In this post, we’re going to take a look at the concept of working capital, how to implement sustainable practices, and which solutions are on offer to help businesses that need a boost.
What is working capital?
The term ‘working capital’ refers to a company’s current (liquid) assets minus any current liabilities, like upcoming invoices.
For most companies, working capital is essentially the amount of cash in their business account combined with the