Working capital
Plain-English definition of working capital for small-business cash-flow planning.
What Working capital means
Working capital is the money tied up in day-to-day operations, including stock, unpaid invoices, supplier timing, cash reserves and short-term obligations. A profitable business can still feel strained if working capital is locked up before customer money arrives.
Why it matters
It explains why sales growth can increase cash pressure instead of reducing it.
An example
A large order can look profitable but create a cash gap if stock and wages are paid before the customer pays.