Working capital
Short-term assets minus short-term liabilities — the money running your operations.
Last reviewed 12 September 2026
Working capital is what funds the gap between paying for work and getting paid for it. Growth eats working capital; that is why fast-growing companies borrow.
Improving it rarely requires financing. Invoice on delivery, ask for deposits, and negotiate supplier terms.
Formula
Working capital = Current assets − Current liabilities
Frequently asked
What is working capital?+
Short-term assets minus short-term liabilities — the money running your operations. Working capital is what funds the gap between paying for work and getting paid for it. Growth eats working capital; that is why fast-growing companies borrow. Improving it rarely requires financing. Invoice on delivery, ask for deposits, and negotiate supplier terms.
How do you calculate working capital?+
Working capital = Current assets − Current liabilities
Why does working capital matter for founders?+
Improving it rarely requires financing. Invoice on delivery, ask for deposits, and negotiate supplier terms.
Related terms
Cash gap
A period when money leaves faster than it arrives and your balance goes negative.
Accounts receivable (AR)
Money customers owe you for work already delivered.
Accounts payable (AP)
Money you owe suppliers for goods or services already received.
DSO (days sales outstanding)
The average number of days it takes to collect an invoice.
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