Working capital

Working capital is the money tied up in the ordinary running of the business — stock sitting on shelves, work you have done but not yet invoiced, invoices raised but not yet paid — less what you owe suppliers and have not yet paid them. It is money you own on paper and cannot spend today.

The useful way to hold it in your head is as a cycle measured in days. Money leaves you when you pay for materials or wages. It comes back when a customer pays. The gap between those two events is the length of time your own money is funding somebody else. Stock that sits for forty days, work that takes ten, an invoice raised a week late and paid forty-five days after that: the arithmetic is unforgiving and each of those numbers is something you can change.

That reframing is the whole point of the module. Each stage is a decision somebody in the business is already making, usually without noticing: how much stock to hold, how quickly to invoice, how long to give people to pay. Shorten any one of them and cash appears without a single extra sale. Most small businesses have more money available inside this cycle than they could raise anywhere else, and it costs nothing to release.