ES-V: The Working Capital Dilemma for Startups
What is Working Capital? Product manufacturing companies require money to manufacture goods and sell. The company has to invest in purchasing raw materials, manufacture the goods, sell them and collect money. There is a time gap between the starting of the expenses (on purchasing raw materials) and realization of sales money for the goods. The money required for producing goods and selling during this time gap is called the ‘Working Capital’ . It includes expenses on raw materials, labor, electricity, other utilities, packaging shipping costs and taxes (GST) paid for all the items. Pic Credit: Investopedia The expenditure to make the product could normally start with the receipt of order in B2B segment . But that depends on factors like, how long the consumer is ready to wait, time taken to procure