# Working capital

The cash the business runs on day to day: receivables and stock, less payables.

Every deal needs enough of it on day one to make payroll and pay suppliers before customers pay you, and whether a normal level conveys with the purchase is one of the most-fought lines in the agreement. Buyers who raise it into the deal keep their own cash; buyers who forget it fund the gap out of the first month's receipts, which is how tight months start on day one.

In numbers: A shop that collects in 45 days but pays suppliers in 15 needs roughly a month of operating costs in cash at all times; on $2.4M of revenue that can mean $200k the buyer must hold or raise on day one.

Source: https://searchspheresource.com/glossary/working-capital
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