Working capital is current assets minus current liabilities — what the business has available in short-term liquid resources to fund day-to-day operations after meeting near-term obligations. Positive working capital means the business can cover the next year's obligations from cash, AR, and inventory. Negative working capital is sustainable in some models but a warning sign in most.
Working capital combines the three big short-term balance sheet categories: cash, accounts receivable, inventory (current assets) minus accounts payable and short-term debt (current liabilities). It is the dollar amount of liquid resources the business actually has to operate with after paying what's due in the next 12 months. Working capital management is the discipline of optimizing each component — collecting AR faster, holding less inventory, stretching AP — to free up cash for growth or buffer against shocks. Working capital does not equal cash; a business can have substantial working capital tied up in AR and inventory while having very little actual cash in the bank.
Working Capital = Current Assets − Current Liabilities where Current Assets = Cash + Accounts Receivable + Inventory + Other short-term assets and Current Liabilities = Accounts Payable + Short-term Debt + Accrued Expenses + Other obligations due within 12 months
Working capital is the operating buffer of the business. Positive working capital means a slow month or a late-paying customer doesn't immediately threaten the business — there's a cushion. Working capital management is also one of the highest-leverage cash creation activities. Every dollar of working capital freed up (by collecting AR faster or holding less inventory) is permanent additional operating cash — no debt, no dilution, no revenue required. Most owners under-manage working capital because the components live on the balance sheet rather than the more familiar P&L.
Fynso surfaces working capital as a living number — not a quarterly balance sheet snapshot. The brief shows each component (cash, AR, inventory, AP) and flags which is moving. When AR builds without offsetting AP movement, working capital tightens and Fynso surfaces it as a leading indicator before cash gets tight. Scenario tools let owners see "what if I cut DSO by 5 days?" — translating discipline into the specific dollar amount of working capital freed up.
Manufacturing
A small manufacturer carrying $400K of inventory, $250K of AR, and $80K of cash against $200K of AP runs $530K of working capital. The cycle is asset-heavy because raw materials need to be purchased before sales, then customer payment lags production by 30+ days. Working capital can swing $100K month-to-month based on order timing.
Professional services
An agency with minimal inventory, $180K of AR, $60K of cash, and $30K of AP runs $210K of working capital. The lever for this business is DSO — cutting collections from 45 to 30 days frees up $60K of cash permanently with no other changes.
Subscription businesses
A SaaS that bills annually upfront can run negative working capital — deferred revenue (a liability) exceeds AR and inventory combined. This means customer payments are financing the business, which is why healthy subscription businesses can grow rapidly without external capital.
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