Working Capital Facility

A flexible lending arrangement that allows a borrower to draw down, repay, and redraw funds up to an agreed credit limit over the life of the facility, paying interest only on the amount outstanding plus a commitment fee on the undrawn portion. Revolving credit facilities are the primary source of working capital flexibility for corporate borrowers and are typically secured by a floating charge over the borrower's assets.

The value embedded in a company's external relationships with customers, suppliers, partners, regulators, and other stakeholders. Relational capital is a core category of intangible assets that underpins revenue stability, market access, and collaborative innovation capacity.

A set of methods for measuring and reporting the economic value of an organisation's workforce, including recruitment costs, training investment, experience, and productivity contributions. Human capital accounting seeks to address the gap between traditional financial reporting and the true value that people create within knowledge-intensive enterprises.

A mechanism in M&A transactions that adjusts the purchase price based on the difference between actual working capital at closing and a pre-agreed target level. Net working capital adjustments ensure the buyer receives the agreed level of operating liquidity and are a standard feature of enterprise value to equity value bridge calculations.

The legal transfer of a company's right to collect payment from its debtors to a lender or financial institution as security for a loan or as part of a receivables financing arrangement. Assignment may be by way of security (where the receivables serve as collateral) or by way of sale (as in factoring or securitisation).

A form of receivables financing in which a business borrows against its outstanding invoices while retaining responsibility for credit control and collections. Unlike factoring, the borrower's customers are typically unaware of the financing arrangement (confidential invoice discounting).

A security interest that becomes effective only upon the occurrence of a specified trigger event, such as a covenant breach, a decline in borrower creditworthiness, or the drawing down of a revolving credit facility beyond a certain threshold. Springing liens provide lenders with additional collateral protection when needed while allowing borrowers to operate without encumbered assets during normal business conditions.

A set of technology-based financing solutions that optimise cash flow by enabling suppliers to receive early payment of their invoices at a discount, funded by a financial institution or platform, while the buyer retains its original payment terms. Supply chain finance (also known as reverse factoring) benefits all parties: suppliers improve working capital, buyers extend payment terms without damaging supplier relationships, and financiers earn a return backed by the buyer's credit quality.

What special considerations apply to B2B ecommerce and wholesale businesses?

B2B ecommerce differs from B2C: sales cycles are longer, deals are larger, inventory management is critical, and wholesalers expect payment terms and volume discounts.

What is working capital and why does it matter in M&A?

Working capital is current assets minus current liabilities; in M&A, buyer and seller agree a normalised target, and under completion accounts the price rises if working capital at completion is above it and falls if it is below.