Working capital is the money a business has available to fund its everyday operations. In broad terms, it is the difference between a company's current assets, such as cash and money owed by customers, and its current liabilities, such as supplier bills due soon.
Why it matters
Healthy working capital means a business can pay wages, suppliers and running costs comfortably while waiting for income to arrive. Tight working capital can make day-to-day trading stressful even when the business is otherwise profitable.
- It covers short-term costs like stock, wages and supplier payments.
- It smooths the gap between paying out and being paid.
- It is a sign of how comfortably a business can meet its near-term obligations.
How borrowing can help
Some businesses use a facility to support working capital during a busy season or while waiting on customer payments. The right approach depends on the pattern of your cash flow and the cost of borrowing.
Credicorp offers Credicorp Flex and Credicorp Slice to UK limited companies and LLPs for business purposes. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Our team can discuss whether a facility suits your working-capital needs.
See also: What is net working capital?, Funding everyday working capital for your company and Funding for restaurants and cafés.