Working+Capital+Management

=Working Capital Management=
 * Net working capital consists of the difference between your current assets and current liabilities. If your current liabilities exceed your current assets at any time, you are in big trouble because you are likely bankrupt.
 * Smart entrepreneurs understand how to manage their current assets (cash, marketable securities, inventory, and accounts receivable) and their current liabilities so that they optimize their working capital.
 * ==Current asset management==
 * The goal of cash management is to obtain the highest possible return on your cash. This includes petty cash, cash on hand, and cash in savings and checking accounts.
 * Marketable securities are short-term investment vehicles that include US government treasuries, government and corporate bonds, and stocks. Excess cash should be invested in these vehicles because they appreciate in value at a higher rate than cash.
 * The whole point of using accounts receivable is to induce customers to buy by offering credit. The business could issue its own credit cards or a line of credit to its customers.
 * The goal of inventory management is to maximize customer satisfaction (you don't run out of what they want to buy from you) while minimizing the cost of inventory you maintain. In 2011, Build-A-Bear's inventory continued to climb even while its annual revenues were declining. No one was paying attention to how these two figures should be related. The two key functions of inventory management are to determine the economic order quantity and the reordering point. These calculations are illustrated in the Houndstooth Hut example spreadsheet below.
 * ** [ placeholder for forthcoming revised Houndstooth Hut EOQ and ROP calculations ] **


 * ==Current liabilities management==
 * //**Current liabilities management**// consists of minimizing a business' short-term obligations and payments for short-term debt, accrued liabilities, and accounts payable. These items typically consist of short-term debt management, accrued liabilities management, and accounts payable management.
 * In order to minimize current liabilities, businesses should try to take advantage of trade discounts offered by their suppliers. The trade discounts example spreadsheet below illustrates how to do this.

How to build small business credit:
//** Read **//the wiki page on LetterLogic (this page includes an Excel file showing how patient venture capital investors helped Letter Logic grow and harvest a substantial return on their investment.