Working capital is the cash your business has on hand to cover day-to-day operations. Too little and a slow month becomes a crisis; too much sitting idle and you are leaving growth on the table.
A simple definition
A common measure is current assets minus current liabilities — what you could convert to cash soon, less what you owe soon. Positive working capital means you can cover near-term obligations without scrambling.
How much is enough
It depends on your cash cycle. Businesses with long gaps between paying suppliers and getting paid — contractors, wholesalers, seasonal retailers — generally need a larger cushion than those paid at the point of sale. A practical starting point is to know how many months your cash would cover at your current burn.
Bridging a gap
When a temporary shortfall appears, a line of credit or revenue-based financing can bridge it without disrupting operations.
Check your runway with our cash runway calculator, or explore options with Find Your Funding Fit.