EDMONTON, Oct. 12, 2017 /CNW/ - Fifty-six per cent of business owners said they are actively taking steps to improve their working capital, according to the latest issue of ATB Financial Business Beat.
Reflecting the kind of Alberta entrepreneurial spirit celebrated through Small Business Week (Oct. 15-21), these results demonstrate a resolve to restore balance sheet liquidity and to think positively about preparing for growth.
Regardless of a company's size or industry sector, working capital provides the necessary liquidity to meet short-term commitments and to provide capital for growth.
A business may need to increase its working capital to meet a sudden increase in market demands or—as is the case for many Alberta businesses—to fund day-to-day operations during times when business markets are on economic standby.
When it comes to top factors impacting their working capital, over a quarter of respondents (26 per cent) cited the current state of Alberta's economy.
"Cash is king for business owners. This makes working capital especially critical during a downturn, because that's when sales are decreased or customers are taking longer to pay, which limits cash flow," says Teresa Clouston, ATB Executive Vice-president, Business and Agriculture.
While respondents cited varied strategies for growing their working capital, 43 per cent said they are minimizing staffing levels, and 41 per cent are trying to stay competitive by introducing more favourable terms into their negotiations. When asked if they had taken any other steps to improve their working capital situation, 26 per cent of those who had taken steps cited expansion and/or company growth.
In addition to this, 31 per cent said they have pulled funds directly from personal savings to supplement working capital needs, while 20 per cent have chosen to postpone payments on principal debt to keep cash flow available.
"While business is certainly personal, business owners should try to avoid dipping into their own savings and instead consider quick, helpful solutions to get them through a crunch," says Clouston. "Some examples include deferring payments, extending amortization dates, consolidating debt and negotiating with suppliers."
On the whole, while most small business owners (69 per cent) rated themselves high in their understanding of working capital, 30 per cent rated their comprehension as moderate to low. Twenty-nine per cent indicated they have never sought professional advice about managing working capital and only two per cent are assessing effective working capital management on a daily basis.
But while high-level, sophisticated planning certainly has its place in the business landscape, sometimes focusing on the basics can be the best place to start.
"Growing your working capital doesn't have to be complicated," says Clouston. "Simple strategies like careful planning, reducing debt, finding opportunities to save on money, and living within your means can make a significant difference."
About ATB Financial
With assets of $48.6 billion, ATB Financial is Alberta's largest home-grown financial institution. Established in 1938, ATB is a network of 173 branches, 143 agencies, a Customer Care Centre, two Entrepreneur Centres, along with mobile and online banking. ATB's more than 5,000 team members help more than 730,000 customers in 247 Alberta communities.
Read the latest issue of ATB Financial Business Beat.
SOURCE ATB Financial
For further information: To schedule an interview with Teresa Clouston, please contact: Connie Smart, Corporate Reporter, ATB Financial, 587-785-0915, [email protected]