Working Capital

What is Working Capital?

Working capital is the difference between a business's current assets (cash, accounts receivable, inventory) and its current liabilities (accounts payable, short-term debt, accrued expenses). It measures a company's ability to meet its short-term financial obligations and fund day-to-day operations.

Why Working Capital Matters

Insufficient working capital is one of the leading causes of business failure — even for profitable companies. A business can have strong sales and healthy margins but still face a crisis if it can't cover payroll, rent, or supplier payments because cash is tied up in inventory or outstanding receivables.

How B2B Financing Preserves Working Capital

Pay-over-time financing directly addresses working capital challenges. For buyers, it allows them to acquire needed goods without depleting cash reserves — preserving working capital for other operational needs. For sellers, getting paid upfront by a financing provider means faster cash collection that strengthens their own working capital position.

Key Takeaways

• Working capital equals current assets minus current liabilities
• It measures the ability to fund operations and meet short-term obligations
• Insufficient working capital can threaten even profitable businesses
• Flexible financing preserves working capital for both buyers and sellers