We all know that cash is king when it comes to business success, but what exactly is ‘working capital’ and how does this financial metric help measure the health of your business? 

Working capital is made up of the cash and assets that are available in the business to fund your operations and keep you trading. It’s worked out by taking your current assets (the things you own) away from your current liabilities (the things you owe to other people). 

So, why is working capital such a critical metric?

Having the Liquid Capital Needed to Trade

It is possible for your business to be busy, successful and profitable, but for your cash position to still be in poor health – and that can have a serious impact. 

If you cannot readily convert your assets into liquid cash, it’s a struggle to meet your cashflow goals, pay your bills and fund your day-to-day operations. But with the optimum level of working capital, you strengthen your balance sheet and put the company in a solid financial position to meet its financial commitments, invest in future activities, and grow. 

To achieve this healthy level of working capital you will need to: 

Talk to us about optimising your working capital

Working closely with your accountant is vital if you want to promote the ideal level of working capital in the business. At D V Marlow we can help manage your cashflow, monitor and advise on your financial metrics, and provide guidance on additional finance and funding when your capital needs a boost.

Get in touch to start maximising your working capital – info@dvm.co.uk