How exactly is Working Capital calculated?
Formula: Working Capital = Current Assets – Current Liabilities.
A business with a positive Working Capital is one that has additional income after paying off all bills, loans, staff costs, etc. In simple terms; a profitable business.
A business with a negative Working Capital, is the exact opposite of the above. If a business has a negative working capital, then it is not currently profitable.
Businesses can slip into a negative Working Capital at one time or another, and it can happen for many reasons, such as long-term spikes in interest rates, or sudden business growth that was not anticipated. Even businesses with good credit scores can dip into negative working capital at one time or another.
Can you steady out Working Capital?
Yes, you can. There are a few options available to small businesses with good credit who do not want to take a loan out.
Invoice Factoring is one of the best solutions available. You can choose whether to sell, one, five, or all your upcoming invoices whilst securing the cash now. Invoice factoring leaves you in control of your money, without having to wait for your client to pay the bill.
My managing your incoming cash flow, you can steady out your working capital, especially by drawing money from your busier months – to your quieter months.
Invoice Factoring is a flexible service, with an option available for every business.
Do you struggle to find time invoicing customers? Have a look at outsourcing your invoicing.
Would you like to outsource your invoicing, without your customers knowing? Confidential Invoice Discounting would be your go-to solution!
Would you like to know more about our services?
We welcome any questions you may have!