Working capital. What is it, and how can it benefit my business?

We all need a little leg up from time to time, especially this time of year. The winter months can have an adverse effect on some businesses, whether it be cash flow, staffing issues, or a lack of operational equipment. But there are ways to help.

Alpha Asset Finance not only offers asset finance, invoice finance, and refinancing, but we can also look at tailored solutions to increase your working capital.

What is working capital?

Working capital is the money you are left with when you subtract your outgoings from your income in your business.

Working capital isn’t something you can apply for, but using financing options, such as asset finance, will help free up your working capital, allowing you to create a more healthy cash flow position.

Alternatively, funding an asset can bring in more income, for example, a new contract or replace those long term cross hire costs. Therefore, creating more working capital in your business. 

What is the difference between working capital and finance?

Finance is like a cash injection into your business. Whether it be for the purchase of an asset or invoice finance to allow you to free up cash flow ahead of an invoice being paid, working capital will increase and allow you that all-important breathing space in the business.

Isn’t working capital money I have in the bank?

In short, no. Your bank balance is different to working capital.

Working capital is an indicator of the short-term financial position of an organisation. It is also a measure of its overall efficiency, not how much money you have in the bank.

How to calculate your working capital.

Still not sure how to get the best out of your working capital?

Give Alpha Asset Finance a call today. We can offer you a no-obligation review looking at your business’s specific needs and work together to see how we can increase your working capital to get the best for your business.

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