Working Capital
The funds tied up in day-to-day trading, calculated as current assets less current liabilities, including receivables and stock.
What it is
Working capital is the money a business needs to fund its everyday operations. It is current assets, such as cash, stock and receivables, minus current liabilities like payables. Slow-paying customers lock up working capital in the sales ledger, which is why days sales outstanding matters so much.
Freeing it up
Tighter credit control releases working capital: shorter terms, firm collections, and quick action on overdue accounts all bring cash back into the business sooner. Forecast the cash impact of changing your terms with the Merion business tools before you act.
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