Working capital supports the period between paying for business inputs and receiving cash from customers. Understanding that period is essential before deciding whether finance is appropriate.

A distributor may need to pay a supplier before selling stock. A manufacturer may incur material and labour costs before delivering an order. A service business may complete work before an invoice is settled. Each business has a different cash cycle.

Begin by identifying the normal timing of purchases, production, sales and collections. Separate slow-moving stock from regularly replenished items, and distinguish overdue customer debts from dependable collections. Growth can increase cash pressure if additional sales require expenditure long before payment arrives.

A financing arrangement should be assessed against that cycle. Its repayment schedule needs to make sense alongside the business’s likely collections and other obligations. Supplier discounts or a large order should not be considered in isolation from the full cost and risk.

Vardent is examining how a proposed enterprise-focused institution could respond to these needs. Businesses can describe their trading requirements through the interest form; no financing commitment arises from doing so.