Working Capital
Working capital is the difference between a business's current assets and its current liabilities. In practical terms it is the money available to run the business day to day: cash, receivables, and other short-term assets, less the bills and obligations due within the same period. Positive working capital means a business can meet near-term obligations. It is a measure of liquidity rather than profitability, and a profitable business can still run short of it.
Last updated: August 2026
Why working capital matters
Agencies that front client ad spend consume working capital faster than almost any other service business, and they do it in proportion to how well they are selling.
The mechanism is straightforward. Campaigns run in January. The card bill arrives in February. The client pays in March. The agency covers the gap, and the gap scales with every new client won. This is why an agency can be growing, profitable, and unable to accept a large new account at the same time.
Where the ad spend is funded from decides whether growth costs cash. If it comes from the agency's own account, every new client is a capital call. If it comes from a credit line sized to managed spend, it is not.
How businesses manage working capital
- Payment terms: negotiating client terms that land before the card is due.
- Credit lines: using facilities sized to the spend rather than to the balance sheet.
- Cash flow forecasting: modelling the gap weekly rather than monthly.
- Removing the float: funding client spend from client budgets rather than agency cash.
Business examples
An agency holding a $200,000 cash buffer purely to cover client ad spend between billing and reimbursement. A brand extending its cash cycle by paying ad invoices on card terms rather than by bank transfer. An agency that stopped needing a buffer after moving client spend onto a funded card.
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Frequently asked questions
Working capital is a position measured at a point in time. Cash flow is the movement in and out over a period. A business can show healthy working capital on paper and still have a cash flow problem if receivables are slow.
It consumes it whenever the business pays for advertising before the revenue or reimbursement arrives. The larger the spend and the slower the collection, the more capital is tied up.
It can extend the cycle. A charge card creates a gap between purchase and due date, and Opal Ad Pay extends cash flow by up to 55 days on Meta and Google invoices, so payment happens after results rather than before campaigns run.
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