Working Capital

Working capital finance can take many forms and is generally intended to support the cash flow of the business.

Working capital finance can be used to:

• Purchase stock
• Finance work-in-progress
• Bridge timing differences between paying staff and suppliers, and collecting payment from customers

On the whole, it will be a fluctuating facility which will ebb and flow in line with your turnover.

Common forms of working capital finance include:

• Overdrafts
• Revolving credit facilities
• Short-term loans
• Invoice finance

The interest rates and fees on some working capital facilities can be higher than you would expect to see on a term business loan, the argument being that you will only be borrowing for a short period of time and the facility will not always be fully drawn. You can also be faced with a high rate of interest if you are experiencing a cash flow crisis and leave it until the last minute to arrange finance. It stands to reason, therefore, that if you need a permanent loan for more than 12 months, you might be better-off lookng at other solutions.

Talk to us about whether a working capital facility is right for you and, if so, what type.