Increasing Working Capital: How to Put Assets, Inventory, and Strategy to Work

Every business, whether small or large, thrives when it has a healthy working capital. Working capital is the lifeblood of your business—it’s the money available to cover day-to-day operations, invest in growth opportunities, and cushion against unexpected expenses. Yet many businesses overlook the easiest ways to boost it. Often, the solution isn’t just about making more sales or cutting costs—it’s about optimizing what you already have.

Here’s a practical guide on how to maximize working capital by leveraging your assets, streamlining operations, managing debts effectively, and partnering with the right financial advisors.

1. Put All Assets to Good Use

The first step in increasing working capital is to take inventory of everything you own—literally and figuratively. This means reviewing not only your physical inventory but also your services, equipment, and even your employees’ time.

Take a trip to your storage areas. You’d be surprised how often items are left to collect dust while they could be generating revenue. Perhaps old equipment could be repaired and sold, or inventory that’s been sitting idle could be repurposed or bundled into a new offering. By making the most of what you already have, you avoid unnecessary spending and free up resources for other opportunities.

But assets aren’t just things—they include your human capital. If you notice employees have idle periods or underutilized skills, assign them tasks that contribute to long-term goals. For instance:

• If you plan to expand delivery services, have staff research communities in need of such services.

• If opening a new branch is on the horizon, assign employees to scout locations, vendors, or local marketing strategies.

Breaking long-term goals into short-term, actionable steps is key. Daily and weekly task lists ensure that both you and your team remain productive and accountable. In essence, every asset—material or human—should be actively contributing to growth and profitability.

2. Get Rid of Everything You Don’t Need

Once you’ve optimized your assets, it’s time for a tough—but necessary—step: eliminate excess. This includes products, services, equipment, and even employees.

Unused inventory and outdated equipment not only take up space but also tie up capital that could be used elsewhere. Sell what’s not essential. Streamline services that aren’t profitable. Every unnecessary item or service you remove adds flexibility and cash flow.

When it comes to staffing, honesty is crucial. Having too many employees can be just as costly as holding onto unnecessary inventory. Instead of keeping underutilized staff, consider outsourcing certain functions. This ensures your team is lean, agile, and focused only on tasks that truly contribute to your business objectives.

Remember: trimming excess isn’t about cutting corners—it’s about creating efficiency. Money saved and resources freed can be redirected into areas that generate tangible returns.

3. Do Not Put Off Debts

Debts are often one of the fastest ways working capital can be drained. Outstanding invoices, unpaid bills, or delayed debt repayment can create unnecessary stress and hurt your cash flow.

Start by reviewing all invoices that are older than 30 days. Have staff begin following up immediately to ensure payments are collected. For invoices over 60 days, prioritize aggressive collection to prevent bad debt. Timely collection is critical—it improves liquidity and keeps your cash flow steady.

On the other side, review the debts your business owes. Set a repayment schedule and stick to it. The longer you wait to pay a debt, the more interest it accumulates. Paying promptly not only saves money but also fosters credibility with suppliers and lenders.

Practicing disciplined debt management prevents procrastination in other business areas as well. A clear understanding of what is owed and what is coming in keeps your financial picture organized and ensures that working capital remains available for strategic initiatives.

4. Find a Trusted Advisor

Even the most capable business owners can feel overwhelmed when it comes to financial decision-making. A qualified financial professional—whether an accountant, attorney, or advisor—can provide guidance on complex issues and help you optimize working capital.

However, trust and credibility are paramount. Before choosing an advisor, research their client history and reputation. Ask for recommendations, and if possible, speak to past clients about their experiences. A trusted advisor can help you identify cost savings, tax efficiencies, and investment opportunities.

That said, don’t become entirely dependent on your advisor. Maintain the ability to make independent financial decisions. Knowledge and oversight of your own finances ensure you remain in control while still benefiting from professional guidance.

5. The Bigger Picture: Working Capital as a Growth Engine

Increasing working capital isn’t just about improving your balance sheet—it’s about giving your business flexibility, resilience, and growth potential. When assets are actively used, waste is minimized, debts are managed efficiently, and trusted advisors guide strategy, your business becomes better positioned to seize opportunities.

Consider this: with higher working capital, you can invest in marketing campaigns, hire skilled staff, expand product lines, or explore new markets—all without taking on unnecessary debt. You also have the ability to weather slow periods or unexpected expenses without panic.

By consistently applying these principles, you create a virtuous cycle: increased working capital leads to smarter investments, which leads to higher profits, which in turn reinforces financial stability.

6. Action Plan: Putting It All Together

Here’s a simple framework you can start implementing immediately:

1. Inventory & Asset Review

   • List all inventory, equipment, and idle resources.

   • Identify ways to repurpose, sell, or optimize.

2. Task & Goal Alignment

   • Break long-term business goals into short-term tasks.

   • Assign tasks to employees and monitor progress weekly.

3. Eliminate Waste

   • Remove unnecessary inventory, services, and even staff.

   • Consider outsourcing non-core functions to reduce costs.

4. Debt Management

   • Track incoming payments and follow up on overdue invoices.

   • Schedule repayments for debts owed and avoid interest accumulation.

5. Trusted Advisory

   • Engage a financial advisor with a strong track record.

   • Maintain independent oversight of all financial decisions.

By following these steps, you can boost working capital, increase profitability, and set your business up for sustainable growth.

Maximizing working capital is less about complicated financial maneuvers and more about smart management of existing resources. Put all assets to work, remove what’s unnecessary, manage debts responsibly, and seek professional guidance when needed.

With a structured approach, your business can generate more cash from the resources you already have, freeing you to focus on growth opportunities and long-term success. Working capital isn’t just a number—it’s the engine that keeps your business running smoothly and profitably.

Take action today. Sort your inventory, review your employees’ tasks, streamline operations, and manage debts proactively. By doing so, you’ll be turning idle resources into cash flow and creating a strong foundation for your business’s future.