Working Capital

Importance

 Working capital indicates how well you positioned your company to meet its near-term cash needs. When your company has significantly more cash on hand or receivables that readily convert to cash than you have debt principal payments or payments to vendors, your risk of ceasing operations due to an inability to pay your bills plummets. Working capital financing can eliminate any gap between cash flowing into operations and cash flowing out. 

Fast & Flexable

 One advantage of this type of business funding is that most eligible companies can obtain short-term loans, including accounts receivable credit lines, inventory loans or bank lines of credit, in a short period of time. The loan amounts are typically a fraction of revenues and are tied to assets that quickly convert to cash. Working capital financing is generally flexible, with varying interest rates and repayment terms. This flexibility can help companies with seasonal or periodic fluctuations smooth out cash flow. 


Short & Medium Term Options

 Your company can also finance working capital with a term loan. Short-term working capital financing addresses cyclical needs throughout the fiscal year. Mid-term working capital financing provides the funds to purchase additional inventory and generate the receivables that increase working capital. For companies with growth prospects over the next few years, this option provides access to a steady stream of capital to cover gaps created by growth-related expenses.