Working capital is probably the most basic building block of any enterprise. So fundamental and essential is it, in fact, that the BBC includes a teenager’s guide to working capital in its broadcast GCSE course in Business Studies.
In short, working capital keeps any business solvent by ensuring that its short-term debts are met when they fall due.
Adequate working capital, therefore, is essential for:
• paying the salaries and wages of staff;
• settling debts – on pain of legal action being taken by creditors; and
• taking advantage of any discounts offered on the prompt payment of the company’s bills.
So, where might you turn if the company has insufficient working capital? Continue reading “Getting working capital”