Winning a contract a business cannot fulfil can be worse than losing it, so entrepreneurs should calculate the true cost of delivery before submitting a bid.
Frequently Asked Questions
Why might a profitable contract cause cash-flow problems?
The business may need to spend money on staff, stock and transport before receiving payment.
What is working capital?
It is the money and short-term resources available to fund the day-to-day operation of the business.
Should businesses borrow money to fulfil a contract?
Sometimes financing can be appropriate, but the business should understand the repayment obligations and payment timing before taking on debt.