What is working capital? Working capital is the money you need to run your business. Dictionary.com defines it as "the amount of capital needed to carry on a business," or your current assets minus your current liabilities. Calculating it shows your liquidity. That helps you judge how efficient and financially stable your company is. Every business owner, small or large, can benefit from knowing this.
Why is working capital important to a business? Knowing your working capital needs gives you insight into your company's financial health. Strong working capital management also helps you move your business forward. When you keep enough working capital, you can pay your short-term expenses and debts. You can also set aside the right amount to invest in your future.
What is a lost opportunity cost? Business owners make frequent choices about how to use limited resources. Every choice sends those resources in one direction instead of another. Buying new equipment may leave less money for employee training. Taking on one time-consuming project may mean passing on several smaller, but important, projects. Every decision, however small, has an opportunity cost.
Imagine your company can make a large sale to a creditworthy customer. The sale would mean real growth, and it could lead to more sales of that size. But right now, you don't have the working capital to complete it. You would need to buy more materials or pay more employees before the customer pays you. That would strain your resources.
You could turn the sale down and lose the chance to grow. Or you could secure financing from your bank, such as a loan or a line of credit.
How should I measure opportunity costs? Whether to pass on an opportunity or finance it depends on how profitable it could be. If the customer's payment covers your fixed costs, your variable costs and the cost of financing, it may be a good opportunity. If it won't cover all of your costs, it is probably not worth pursuing.
When you weigh a possible sale, estimate the financing cost in dollars, not in percentage points (APR). Add that dollar cost to the fixed and variable costs of the project. This gives you a clearer picture of the sale's value. It can also help you quote the customer a price that earns you a profit.
If you are looking for other ways to fund growth, consider Nevada's Emerging Small Business certification. It can open the door to more contracting and capital opportunities. CARDZ3N Technology with a Human Touch (702) 623-3528 contact@cardz3n.com
Every merchant's processing setup is different, so the right answer depends on your industry, sales channels, average ticket size and chargeback history. CARDZ3N's payments specialists review those details with you and match your business with the right sponsor bank, gateway and risk tools, whether you sell online, in store, by invoice or on a recurring subscription.
We work with merchants across the USA, Canada, the UK and the EU, including high-risk, B2B and fast-growing businesses that traditional processors often turn away. If you would like a second opinion on your current rates, contract terms or approval options, contact our team for a free, no-obligation processing review.
Joshua Benedetti is the CEO of CARDZ3N, a Las Vegas-based merchant services provider specializing in high-risk payment processing and B2B payment technology.
Joshua Benedetti on LinkedInCARDZ3N Inc is headquartered in Las Vegas, Nevada, and provides merchant services to businesses that traditional processors turn away. Backed by top-tier sponsor banks and processors, CARDZ3N combines institutional stability with the speed of a specialized team that understands high-risk industries. Services include high-risk account underwriting and placement, gateway solutions across the major gateway platforms, POS integrations, ACH and check processing, chargeback prevention through ChargebackZ3N, and business lending and working capital. Its AerospacePay division serves OEMs, MROs, FBOs, and repair stations with B2B and B2G payment processing. CARDZ3N serves merchants in the USA, Canada, the UK, and the EU.
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