accounting
Working Capital
Working capital is current assets minus current liabilities, the short-term liquidity a business has to operate day-to-day.
Definition
What it means.
Accountants define working capital as current assets (cash, receivables, inventory due within 12 months) minus current liabilities (payables, accruals, short-term debt). Positive working capital means you can fund operations from current resources; negative working capital means you depend on incoming revenue to meet obligations.
In funding conversations, "working capital" is also shorthand for any short-term general-purpose financing, lines of credit, revenue-based funding, short-term term loans. The common thread is flexibility of use.
Now what?
Get an offer that accounts for working capital.
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