Working Capital Tool
Innovative tool set to work wonders for Northern Ireland companies
NORTHERN BANK RECENTLY ANNOUNCED THE LAUNCH OF ITS NEW WORKING CAPITAL TOOL‒ AN ONLINE ADVISORY SERVICE WHICH IT SAYS COULD HELP NORTHERN IRELAND COMPANIES TO BETTER MANAGE THEIR WORKING CAPITAL AND RELEASE CASH BACK INTO THEIR BUSINESS. KATHERINE JAMES, HEAD OF SPECIALIST BUSINESS AT NORTHERN BANK, TELLS BUSINESS FIRST MORE…
T
he current challenging economic environment has led businesses across Northern Ireland to increase their focus on efficiencies that can save time, reduce the likelihood of missed business opportunities, and make their cash work harder for them. This has brought into very sharp focus one business critical considerationin particular ‒ theeffective management of working capital.
Every business needs working capital to exist, and the better this working capital is managed, the more successful a business will be in the long run. Working capital is a measurement of a companyʼs current assets after subtracting its liabilities or, put simply, a valuation of the amount of money that a business has tied up in the day to day running of its business.
Different industry types require different levels of working capital. Service industries, for example, need little or no inventory, whereas retailers may require more. Manufacturers, meanwhile, will require a much higher level of working capital to purchase raw materials and to fund work in progress through to finished goods.
Generally though, the most successful businesses possess high levels of working capital, with surplus funds available for investment purposes, while those with negative working capital may lack the funds necessary for growth. Businesses with effective cash flow management practices in place not only generate more cash from their business, but they have more flexibility to take advantage of opportunities as and when
they arise and tend to be less dependent on external financing. For some, working capital
management is easier said than done‒ and thatʼs where our market‑leading Working Capital Tool comes in. The first of its kind in Northern Ireland, the Working Capital Tool couldnʼt be easier to use. It provides useful advice on how much liquidity your business can free up and tips on how best to do that in just a few simple steps, demonstrating the potentials savings you can make on charges such as interest by simply improving your cash management processes. It also provides a unique benchmarking facility which allows you to benchmark your business against other organisations in the same sector. This can then be followed up with a consultation with one of our industry‑ leading cash management specialists, who will visit you at your premises and go through a more in‑depth audit of your accounts and processes in a bid to demonstrate how you can free up more working capital into your business. By playing around with the variables, for example, he or she can demonstrate how you might not have needed that overdraft facility had you been tighter on your debtor days or taken more advantage of terms from your creditors. Our specialist may then be able to offer you one of our cash management facilities such as Invoice Finance ‒an excellent example of a financial tool that can improve cash flow and release working capital back into the business. Invoice Finance bridges the gap between the delivery of goods or services
Ann McGregor, chief executive of Northern Ireland Chamber of Commerce said: “Despite the challenging economic climate, many companies in Northern Ireland are making strides forward, encouraged by export potential in new markets and entrepreneurial flair.
“Much is made of Northern Irelandʼs potential and need for enterprise in order to achieve sustainable economic growth and, if we are to achieve this,
and the payments from customers for companies selling goods or services on credit terms. Rather than having money tied up in invoices that have yet to be paid, businesses can receive an initial payment up front (typically between 70 and 85 per cent can be released as soon as the sales invoice is raised) and the remainder (less charges) when their customer pays.
Having access to these funds means that a business doesnʼt need to miss out on an opportunity because they are awaiting payment, or it can simply ensure sufficient working capital to support day to day running costs.
Itʼs no surprise then that the popularity of Invoice Finance has grown significantly over the past 25 years, particularly as businesses require access to more working capital to assist with the day to day running of the business. No business wants to lose sales and profit through a lack of working capital. Much of our work with business clients is to ensure that they donʼt find themselves missing a business opportunity because of cash flow constraints, and our new Working Capital Tool will play a key supporting role in this.
For more information More information about Northern Bankʼs Working Capital Tool is available at
www.northernbank.co.uk/wct. To talk to a member of the Northern Bank team aboutcash management systems which could support your business, call 028 9004 7142.
our local businesses need to be supported by financial expertise that not only makes funding available, but ensures that their cash is working hard for them. For that reason we welcome the news of the launch of Northern Bankʼs Working Capital Tool ‒ a bespoke financial tool which will help put businesses here on a firm footing as we move along the road to economic recovery.”
www.businessfirstonline.co.uk
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