What is Working Capital?
The short-term liquidity cushion that funds day-to-day operations.
Working Capital: definition
Working capital measures whether you have enough short-term assets (cash, receivables, inventory) to cover short-term obligations (payables, accrued expenses, short-term debt). Positive working capital means operational breathing room; negative or shrinking working capital is an early sign of a cash squeeze even when the P&L looks fine.
Net working capital
Working Capital = Current Assets − Current Liabilities
Driven largely by receivables (DSO), payables (DPO), and inventory - the components of the cash conversion cycle.
How Fintra handles it
Fintra keeps working capital visible in real time by holding AR, AP, inventory, and cash on one ledger, and it manages the levers directly - faster collections lower receivables, deliberate payment timing manages payables, and the forecast projects the working-capital position weeks ahead so a squeeze is visible before it bites.
Worked example
Frequently asked questions
What is a healthy amount of working capital?
Enough to comfortably cover near-term obligations with a buffer - often expressed as a current ratio (current assets ÷ current liabilities) above 1.0, commonly 1.2–2.0. Too little risks a squeeze; far too much can mean cash sitting idle instead of being deployed.
How do you improve working capital?
Collect receivables faster (lower DSO), manage payment timing (optimize DPO), reduce excess inventory, and avoid tying cash up unnecessarily. Fintra manages these levers directly and forecasts the resulting position.
Can a profitable company run out of working capital?
Absolutely. Profit is an accrual concept; cash is not. Fast growth, slow collections, or heavy inventory can drain working capital even while the P&L shows profit - which is why Fintra ties profitability to the live cash and balance-sheet picture.
How does Fintra help manage working capital?
By holding receivables, payables, inventory, and cash on one ledger and forecasting them together, Fintra makes the working-capital position live and projectable, so you can act on a looming squeeze early rather than discovering it when the account is empty.
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