Managing your working capital is very important as it keeps your firm running on a day-to-day business, but it's equally important to consider where your company could benefit from long-term investment.

Working capital is concerned with the present day and your current assets, such as your stock and the amount owed to you by clients for products they have bought. In addition, it includes the management of your short-term liabilities, which cover all sorts of outgoings, such as the money you need to pay suppliers and outstanding balances that require settling sooner rather than later. Capital investment takes a longer-term view and by paying attention to where you could boost financing you're more likely to structure a successful business.

Building a future

Your long-term assets are generally defined as those that will lead to the generation of revenue for longer than 12 months. There are two different types divided into tangible and non-tangible categories. The reason that they are often used to help build a successful business is that they have long-term appeal, meaning they provide stability to your firm over a longer length of time. In addition, they can also boost the image of your company and attract new employees, which is helpful when it comes to expansion.

Where to make capital investments?

It can be difficult deciding which of your long-term assets ought to be earmarked for investment. Training courses feature tips on different techniques you can use if you'd like to learn more. One of the most important factors to consider is the nature of your company and the funding that you have available.

For example, if your business is dependent on having the latest software then you may want to take a look at your current systems to see if updating them would have a positive impact on operations. If you need more space to expand, property may be top of your list, while those organisations that manufacture goods could invest in new machinery. These purchases are recorded on balance sheets as tangible assets and in that sense they can help to boost the value of your firm, which might lead to more investment opportunities and possible funding.

Finding funding

Having earmarked the kinds of assets you'd like to direct financing towards, you'll need to locate funds. There are many options available, with banks the popular investors for lots of organisations. Having up-to-date accounts will allow the lenders to see how you intend to pay them back, so ensure your profit and loss accounts and cash flow statements are in order before meeting with those concerned.

If you prefer not to approach banks then you may like to look into equity finance. Simply put, this is where investors give you funds in exchange for shares in your company. Usually venture capitalists fulfil this role and there is often flexibility regarding how much of a stake in your firm that is handed over, as well as different contracts concerning when finances are returned to investors. Investigating business angels is another useful avenue to explore, with these individuals usually asking for minority stakes for their expertise and contacts.

Protecting assets

After making capital investments it's important that you take good care of the items purchased, as they are normally expected to last for at least several years. Insurance is a necessity, as well as protection of intellectual assets (intangible assets) and staff retention.