To adapt with the growing world one needs to manage every aspect of the business effectively, many times it becomes difficult to manage finances and there comes the need for funds. Small or medium enterprises face these issues more frequently. Here, working capital finance helps in such a scenario. Working Capital is the difference between the company’s current assets and its current liability. This type of finance helps one in short-term operations like purchasing of raw materials, undertaking operational payments, etc. Hence, the Working Capital facility allows one to run its operations smoothly and efficiently.
The WC Cycle refers to the period taken to convert the company’s net current assets and liabilities into cash. The time gap between production and selling of goods into the market is high. The Working capital cycle varies from industry to industry. The higher the turnaround time to convert the raw material to cash, the higher will be the requirement of working capital. All these factors finally hampers the working cycle of the company. Hence, working capital finance is the most easily available product in such a situation. There are 4 main elements in the WC cycle — Cash, Accounts Payable (creditors), Accounts Receivable (debtors) and Stock.
Below is the list of a few of our WC instruments:
The formula for Calculating Drawing Power-
Sr. no |
Particulars |
Amount INR (in ‘000) |
Amount INR (in ‘000) |
1. | Insured stock |
4400 |
|
2. | (Less) : Creditors |
(1200) |
|
3. | Paid Stock |
3200 |
|
4. | (Less) : 25% margin on paid stock |
(800) |
2400 Total (A) |
5. | Debtors |
7000 |
|
6. | (Less) : Debtors > 90 days |
(1000) |
|
7. | Debtors allowed for DP |
6000 |
|
8. | (Less) : Margin 40% on above |
(2400) |
3600 Total (B) |
DP = | Total (A) + Total (B) |
6000 |
Hence, the above borrower has DP of Rs. 60, 00, 000.
If you’re looking for an effortless and fast working capital loan process, Terkar Capital is the best place for you. As one of the top working capital loan facilitators in Pune, we offer you financial support to help your short term business needs. We provide expert guidance for the right selection of the working capital product, a quick turnaround time, and provide the best ROI’s for you. Our expert customer support will provide you with complete information on everything you need to know about the loans as well as help you with anything throughout the tenure.
For inquiries kindly fill the form and our representative will soon get back to you.
8308629820 / 8262831330
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