What is working capital? Essential insights to help businesses maintain liquidity
18/08/2025
What is working capital, and why is it considered the “lifeblood” of every business? Let’s learn about working capital and how to manage this source of capital with SeABank.
Effective working capital management is the key to helping businesses optimize cash flow, minimize risks and improve competitiveness. In this article, SeABank will help businesses better understand What is working capital?, the core role of working capital and smart management methods to achieve sustainable operational efficiency.
What is working capital?
Working capital is an important financial measure, reflecting the short-term resources available to the business to serve daily production and business activities. This is the part of the assets that are regularly circulated during the business operation process..
The formula for calculating working capital is as follows:
Working capital = Current assets – Current liabilities.
Working capital is an important financial measure in business.
The role and benefits of working capital for business
Working capital plays a key role in maintaining stability and promoting business growth. Below are the outstanding roles and benefits of working capital for production and business activities that businesses can refer to:
Maintain continuous operation: Ensure cash flow to cover daily expenses such as employee salaries, expense rent premises, raw materials, ...
Directly participate in production and business: Are the resources needed to operate the entire chain of activities from input to output.
Flexible mobilization when capital is needed quickly: Thanks to high liquidity, working capital can be rotated quickly when businesses need capital urgently.
How to effectively manage working capital for a business
Smart working capital management helps businesses maintain stable cash flow, reduce financial pressure and optimize business operations. Below are working capital management strategies that businesses can refer to and apply:
Determine and maintain safe working capital levels
Businesses need to set levels of minimum working capital to ensure that there is always enough ability to pay short-term expenses. Planning the use and allocation of capital funds properly willAvoid both unnecessary cash flow shortages and surpluses, keeping business operations stable.
Optimize the cash receipts and disbursements cycle
To improve cash flow, businesses should also focus on shortening the time it takes to collect debts from customers and strictly controlling payment expenses. The more optimized the cash cycle is, the faster the business can turn around capital and, at the same time minimize financial costs.
Build flexible financial strategies and realistic forecasts
Businesses should proactively implement cash flow adjustment strategies, such as promoting prepaid sales, improving payment terms with partners, or restructuring capital flows to optimize the efficiency of working capital use.
In addition, accurate forecasting of cash flow, revenue and expenses is extremely important. This helps businesses proactively allocate resources and build periodic financial plans, thereby minimizing risks when the market fluctuates.
Businesses should develop financial strategies to use working capital effectively.
Monitor and evaluate the effectiveness of the capital use process
Working capital management is not a one-time task but a continuous process. Businesses need to regularly measure important indicators such as: current ratio, inventory turnover, debt collection period, etc. This will provide insight into the financial situation, helping businessesAdjust capital management strategy in time to achieve the highest efficiency.
Take advantage of reputable funding sources
In case of needing to supplement working capital quickly, businesses should consider using flexible financial sponsorship packages from reputable banks. This is an effective solution to maintain operations and seize development opportunities.
With experience accompanying thousands of businesses, SeABank understands the importance of working capital in maintaining operations and seizing business opportunities. Therefore, SeABank offers flexible Business Credit solutions, helping businesses easily access capital, optimize cash flow and develop sustainably.
Why should businesses choose credit solutions at SeABank?
To ensure smooth business operations and seize development opportunities, choosing a reputable financial partner is extremely important. So, what makes SeABank the optimal choice for your business when it comes to credit solutions? Here are the outstanding reasons why SeABank is the top choice for many businesses in need of additional working capital:
Solid financial foundation, reputable partner of many businesses
SeABank is one of the leading joint stock commercial banks in Vietnam, with a stable financial foundation and is positively rated by international organizations.With many years of experience accompanying thousands of businesses in diverse industries and scales, SeABank has affirmed its position as a reliable financial partner in every stage of business development.
SeABank has been highly appreciated by international organizations for its reputation.
Provide the flexible, comprehensive financial solutions area for businesses
SeABank offers a wide range of credit products, flexibly meeting all financial needs of businesses at each stage of development. From the need to supplement working capital to expansion investment, businesses can choose flexible limits, terms and forms of collateral. This solution helps optimize capital flow and improve capital efficiency for each specific business goal.
Clear interest rate policy, supporting businesses to confidently plan their finances
At SeABank, loan packages are built with transparent and clear interest rate policies. This helps businesses easily estimate capital costs, thereby building stable financial plans and being more proactive in all business decisions. You can be completely assured when planning development strategies without worrying about hidden costs.
Simple procedures, quick disbursementhappyhelp businesses save time
With the motto of always putting the interests and convenience of customers first, SeABank has streamlined the loan process, from receiving documents to disbursement, helping businesses save maximum time and effort. Fast disbursement ensures the business's cash flow. always be transparent, helping businesses promptly grasp development opportunities without missing any precious moments.
SeABank implements streamlined loan process, saving time for businesses
Conclude
Hopefully with today's article, businesses have a better understanding of What is working capital? and how to manage this capital flow effectively. In addition, to optimize capital flow and seize every opportunity, businesses can contact SeABank for advice on flexible credit solutions, streamlined procedures and competitive interest rates today.
