Funding Working Capital is a challenge for many SMEs in Northern Ireland. Johnston Financial Solutions can arrange finance to support your working capital and trade finance needs. These solutions include releasing value from your assets, sales, and stock. Please speak to our team today to see how we can help your business access better solutions to commercial finance.

Control over your cash flow is critical to every business’s success. Whether you are looking to fund growth, reduce debt, or enhance your balance sheet, optimisation of working capital is vital. Many business owners can make better strategic decisions if they can finance the working capital needed to be innovative or push for growth. Some businesses fail to realise the value within their industry of doing this. So let us look deeper at funding working capital.

How to calculate working capital?

Working capital represents a company’s ability to pay its current liabilities with its existing assets. This figure gives investors or potential collaborators an indication of the company’s short-term financial health, ability to deliver on a large tender, capacity to service its debts and operational efficiency.

Working capital is the difference between a company’s current assets and current liabilities. The challenge here is determining how best to use commercial finance to fund the vast array of assets a business might have. Business owners might also want to protect against any risk the liabilities on a balance sheet may present in the short term. We can help

  • Working capital is the amount of available capital that a company can readily use for day-to-day operations.
  • It represents a company’s liquidity, operational efficiency, and short-term financial health.
  • To calculate working capital, subtract a company’s current liabilities from its existing assets.
  • A positive amount of working capital means a company can meet its short-term liabilities and continue its day-to-day operations.
  • The current ratio (current assets divided by current liabilities) is a liquidity ratio often used to gauge short-term financial well-being; it is also known as the working capital ratio.

Why would you use working capital finance?

Working capital finance may be a good fit if your business needs money to pay ordinary operating expenses, such as payroll or equipment hire costs, pursuing a new business opportunity, or taking on a new contract.

A working capital fund refers to finance used to run everyday business operations. This commercial finance is repaid over a short to medium-term rather than a long-term investment. Working capital finance ensures a business remains agile and can grow without taking on lengthy debt commitments.

There are many kinds of working capital finance, including working capital loans, revolving credit facilities, merchant cash advances, and asset financing. Book a Meeting with Mark to find out more.

How does working capital finance work?

Revolving Credit Financing

Revolving credit financing works by allowing businesses to borrow as much as they need up to an agreed credit limit. Credit cards are perhaps the simplest example of revolving credit financing. Unlike traditional loans, there is no set repayment schedule, and you only need to pay interest on outstanding funds. Once you have agreed on a facility, you can transfer the available funds to other business accounts and use them as required.

Business Overdrafts

Business overdrafts offer another lending option for quick short-term credit facilities. However, traditional banks have become less willing to provide overdraft facilities for businesses. Several alternative lenders offer overdraft products to SMEs, which are more flexible than the conventional facilities provided by high street banks. Therefore, overdrafts remain a viable source of low-level short-term working capital.

How best to fund working capital?

Research from the British Business Banks shows that Northern Ireland SMEs are over reliant on credit cards and overdrafts to fund working capital. BBB has identified that this overreliance on traditional debt products presents an obstacle to increasing productivity, innovation, and growth in the region. Johnston Financial Solutions aim to improve access to alternative working capital funds to deliver the best possible finance for SMEs in Northern Ireland.

Our lenders offer working capital solutions to support all aspects of your end-to-end working capital cycle. Innovative financing can help reduce both performance and payment risks as well as give you access to funds locked up in your future sales, invoices, and other trading assets.

Working capital loans

Are working capital loans a good idea? A working capital loan can help SMEs keep their business running smoothly until cash flow improves. Perhaps business is a little slow, sales are seasonal, or maybe invoices are taking time to clear with customers. Planning for working capital finance is an essential part of good financial planning; speak to our team early on so all options can be explored.

The amount borrowed is limited to what can be recovered in short to medium term. A working capital loan involves a simple application process and is available with several lenders on our panel. The credit rating of the business, and the business owners will be reviewed, and a decision is available within a few days. In some instances, a guarantee or collateral will be required. Working capital loans are often better than credit card debt because they establish a relationship with a lender and ensure that the business can meet operational expenses and spread the repayment costs as part of their cash flow planning.

Merchant Cash Advance

A merchant cash advance deal is a loan that delivers a lump sum payment to a business for an agreed-upon percentage of future credit card and or debit card sales. Several of our clients have seized great opportunities for growth and development using well-sourced deals for Merchant Cash Advance loans. If you have questions about Merchant Cash Advance book a free consultation and we can talk you through the process.

Small businesses can borrow a lump sum, then repay it gradually in small amounts through your customers’ card payments. You will get a lump sum cash injection you can put directly into your business to grow it, renovate it, and more. The Merchant Cash Advance repayment model makes raising finance much more manageable for small business owners. It adapts to the dynamic of your business, so you always know you can afford repayments. The timely purchase of a liquor license to extend the range of products available at a convenience store is one example where Merchant Cash Advance helped secure the deal within days of the opportunity arising.

Release funds against assets

Strategic Asset Finance will help with cash flow and is a great way of funding working capital. There are many deals available from a range of high street banks and alternative lenders

Take advantage of your sales and stock.

Converting assets tied up in your business, such as unpaid invoices, property, or equipment, into cash ensures funding across the value chain. Releasing finds from assets give you flexibility. Johnston Financial Solutions successfully broker deals to help clients release value against their assets typically within 48 hours of the proposal being accepted.

This type of lending can help business owners support ongoing projects and build resilience in their supply chain with earlier financing at a lower cost of funds.

Sale and Hire Purchase Back Assets

Our clients have benefited from Sale and Hire Back finance deals. The finance allows you to initiate new Hire Purchase agreements against assets recently purchased and paid for in full in these deals. Releasing the value in an asset can be arranged relatively quickly without additional security. For example, equipment valued at £75,000 could be financed to release cash for working capital. Typically the cost spread over three to five years. This type of funding is quick and provides greater flexibility over your finances while still having full use of the asset.

Johnston Financial Solutions can arrange bespoke finance solutions for larger projects requiring £250,000 and above asset funding solutions. Get in touch today to see how we can help you.


Finance Lease

A finance Lease enables businesses to use the assets and spread the cost over an agreed term. Some lenders can fund up to 100% of the purchase price. The VAT is payable on the rental payments rather than the overall purchase price. At the end of the lease, you have the option to extend the lease. You can also request to sell the asset at fair market value and receive the majority of the sale proceeds.

Operating Lease

An Operating Lease is ideal if you want the funding of assets for a project or contract work over a defined period. It helps fund the project without the exposure risk of future asset value volatility.

In Operating Lease deals, the residual value of the asset reduces the capital and associated interest charged over the agreed period on the principal amount financed. Operating Lease deals deliver improved cash flow for your business. At the end of the lease term, you can return the asset to us or sell the asset on our behalf.

Hire Purchase

Traditional hire purchase can help your business buy new and used assets and spread the cost over their working life. The equipment or asset acts as security for the facility. You can pay a small ‘transfer of title’ fee when the term ends and own the asset.


We understand that every business is unique. That is why we take the time to understand what is important to you. Let us help you find the perfect solution for your business. Call us on +44 7803312874