What is working capital? How to work it out and why it matters
By SendPay Business · · 2 min read
Working capital is the money a business has available to run day to day. It's what's left when you take the bills due within a year away from the cash and other assets you expect to turn into cash within a year.
The simple sum
- Add up current assets: cash in the bank, money customers owe you, and stock you expect to sell.
- Add up current liabilities: bills, wages, tax and loan payments due within a year.
- Take the second figure from the first. The answer is your working capital.
What the number tells you
A positive figure means you should be able to cover your short-term bills. A negative figure means you owe more in the next year than you expect to have, which can mean borrowing or chasing payments harder.
Ways to improve it
Get paid faster by invoicing promptly and offering easy ways to pay, hold less stock, agree longer terms with suppliers where you can, and keep a cash buffer for tax bills.
Where SendPay fits
SendPay platforms let your customers send invoices and payment links and take payments into GBP, EUR and USD accounts, under your own brand and powered by licensed partners.
Build it
Create your own financial platform.
Pick a template, name it, brand it, preview every page before you pay. Your brand, your users, your fees.
Build my platform →Questions people ask
How do I work out my working capital?
Enter your cash, money customers owe, stock and the bills and loans due within a year, and the free calculator shows your working capital, current ratio and quick ratio.
Working capital calculator →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.