This working capital calculator from Summitreach Capital, a small-business funding broker in Jacksonville, North Carolina, computes the monthly payment, total interest and total repaid for an amount, rate and term from an offer. A worksheet on the page sizes the cash gap between bills due and slow invoices by hand first. Results are illustrative arithmetic only; lending partners set actual amounts, rates and terms.
Step 1: size the gap on paper
A working capital gap is the cash you need to keep paying bills until slow-paying invoices are collected. Work it out before you use the calculator above, because the calculator needs the gap as its amount.
| Line | What to enter | Where it comes from |
|---|---|---|
| A | Bills due before the invoice is paid: payroll, materials, rent, loan payments | Your payroll schedule and supplier terms |
| B | Cash already in the account that is not needed for anything else | Your bank balance, minus a safety cushion |
| C | Any customer payments certain to arrive before those bills | Your receivables aging report |
| Gap | A minus B minus C | If the result is zero or negative, there is no gap to fund |
Add a margin for a late payment. If customers or a prime contractor routinely pay a few weeks late, plan for the late date, not the invoice date.
Step 2: test repayment in the calculator
Enter the gap as the amount. Enter the interest rate and term from an offer you have, or values you want to test, and the calculator shows the monthly payment, total interest and total repaid on a standard amortizing loan. Then ask the important question: does the incoming invoice payment, plus normal revenue, cover that payment comfortably?
If the payment only works when every customer pays on time, the request is too large, the term too short, or the gap is not really a timing problem.
The working capital ratio
The working capital ratio is current assets divided by current liabilities, both taken from your balance sheet. A ratio above 1 means short-term assets exceed short-term obligations; below 1 means the reverse. It is a snapshot, so a business can have a healthy ratio and still face a gap if its receivables are slow to turn into cash. That is why the worksheet above uses dates, not balances.
What the result leaves out
- Fees taken at funding, which reduce the cash you actually receive.
- Daily or weekly payment schedules, which take money out faster than a monthly payment suggests.
- Variable rates, which can change the payment over time.
- Any merchant cash advance pricing: an advance is not a loan and uses a factor rate instead. The MCA remittance calculator handles that case.
How partners decide the amount
A lending partner sets the amount after reviewing revenue, cash flow, credit and existing debt, and it may offer more or less than you asked for. Summitreach Capital does not set or predict amounts. Use the result to decide what to ask for and whether you can carry it. How working capital financing works explains the options; a gap that keeps coming back may suit a line of credit better. More tools are on the guides page.
By Summitreach Capital ยท Updated