Calculate Working Capital

If a company takes all of its short-term assets (e.g. cash in the bank, receivables invoices, stock, etc) and pays all its short-term liabilities (e.g. suppliers, staff, etc) the remaining balance is their working capital position.  If the working capital position is positive, it is more than likely that the company is adequately capitalised and is self sufficient.  If however, the working capital position is negative, then the company needs to make up the difference by borrowing money or using some other source of working capital.  To calculate the working capital of a business, simply subtract its Current Liabilities from its Current Assets.

Working Capital = Current AssetsCurrent Liabilities

Knowing the working capital of a business will help to avoid unnecessary financial strain on the company.  Companies with insufficient working capital will invariably delay payments to suppliers, fail to pay staff salaries, delay tax payments and may ultimately lead to business failure and/or closure.   A useful measurement of the financial health of a business is its working capital ratio.  In a financially stable business, the working capital ratio will be above 2.

Working Capital Ratio = Current Assets / Current Liabilities

For example, a company with current assets of 100,000 and current liabilities of 40,000 has working capital of 60,000 and its working capital ratio is 2.5. Working capital ratios below 2 are an indication that there may be a potential financial problem.  A company with a working capital ratios below 2 needs to address the issue swiftly by borrowing money or using some other source of working capital.

Finding your Current Assets & Current Liabilities

Go to your accounts system and print your Balance Sheet, or ask your accountant for a recent Balance Sheet. Current Assets is a standard heading on most Balance Sheets. There may be a Current Liabilities heading and if not, there should be a heading: Creditors – amount falling due within one year and this is your Current Liabilities.


Low Cost Capital

Exchange Overview
Credebt Exchange® provides an unrivalled and unique form of Low Cost Capital specifically for organisations in the micro-medium business sector. The Exchange model is substantially different from any other type of traditional working capital/lending model. A summary of the principal differences is highlighted below:

  • Selling model, as opposed to a lending model
  • No liens & no personal guarantees
  • Low discount rates & no ‘face value’ charge
  • Access up to 90% of your invoices’ value quickly
  • Single Membership fee, regardless of volume
  • Payment terms can be greater than 90 days
  • Not required to sell all invoices/entire ‘book’
  • No long term contract & leave at any time
  • No ‘Debtor Concentration’ (i.e. no maximum value per Debtor)
  • Block trading & trade automation are possible
  • No retrospective, refactoring, or review fees
  • Simple, streamlined online reporting

Grow Your Business
If accessing your working capital quickly and easily is essential to growing your business, then Credebt Exchange® can help you access the capital ‘locked’ in your invoices now. We convert your invoices into Exchange Traded Receivables [ETR] for sale on the Exchange. ETR offer the best Low Cost Capital and most efficient cash flow solution in the market today.

Your Way
Credebt Exchange® Low Cost Capital uses a unique purchasing/true sale, legal assignment model. You are not borrowing money, you are selling your invoices/ETR. Selling your invoices/ETR dispenses with the onerous requirements associated with traditional lending. As a Member of the Exchange, you only sell what’s needed to meet your capital requirements.

Take Control Now
Take control of your cash flow today and apply for Membership by email using the form below. Priority applications can be processed online or by telephone on 01 799-5499

Low Cost Capital


2013-Q4 ETR Briefing

Exchange Traded Receivables [ETR], are invoices issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q4, Credebt Exchange® held RPA of €4.3m, with €2.7m allocated during the quarter. The full spectrum of available ETR was utilised and all currency exposure was hedged.

Settled ETR totalled €1.9m during the period, representing 36% of all outstanding trades. There continues to be no delinquent ETR recorded to date. Overall market conditions are favourable, with strong growth expected for 2014.

2013-Q4 was the second quarter of trading for Credebt Exchange®. Total Debtors numbered 270+ with a total trade value of € 4.8m to date. Daily volume remained steady in excess of 1,300+. Highest single value trades were in October & December at an average of € 0.15m. Total current RSA are valued at € 15.1m+

Yield trend stabilised at an average of 3.75% during the quarter. Originator trading volumes continued on a slightly upward trend, with Investor demand slowing in December. Originator demand for 2014 will be strong. Additional capacity for RPA contracts of €10-15.0m are expected in Q1-2014, subject to Institutional Investor demand.

2013-Q4 ETR Briefing

† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time

How to use risk to your advantage

As explained in the previous article “It’s all about Risk…” you’ll now understand that larger organisations get preferential treatment from banks.  That’s the status quo and isn’t likely to change any time soon.  So what can you do to improve the banks perception of your business, so that you achieve ‘next best’ status?

The answer is to make sure you present your business as the ‘next best’ lowest possible risk.  This means you have to remove all possible negative ‘what if’ scenarios, wherever you can. What if these top two customers cancel their business with you? What if your cost of supplies increases unexpectedly?  What if a senior member of staff leaves? What if demand in your market declines suddenly?  And so on…

The more you think about all the risks that undermines the integrity and viability of your business, then you’re thinking like a banker.  Banks don’t like risk.  If you have given sufficient thought to the removal or reaction to risk, then you’re making it easier for them to lend to you.

It’s all about Risk

Once you understand risk, then you’ll begin to understand banks and how banking works.  Banks, investors, shareholders, managers, financial markets, brokers and other investment/lending professionals all learn about risk.  That’s not to say they necessarily understand risk in all its guises, but they must understand the principal that high risk is bad risk.

Think of it like parenting. Does a responsible parent leave a young child with the wild teenager next door, or do they leave the child with a mature, responsible adult? If you were a bank, who would you rather lend money to: an established, well managed, large company or the young start-up business (notice how inverting this speaks volumes: ‘up-start’)?

As a bank manager, if you are paid the same salary for lending to large companies as you were for lending to the up-starts (sorry, start-up), but were only promoted when the loan was repaid, who would you lend too?

Unless you’re being obstinate, the answer’s simple: the established, well managed, large company is less risky than the young start-up.  So they get the money first (and in most cases, at much lower cost too). Only after the large corporates market is satisfied, will banks look to the micro-medium sized, more risky market.

Low risk, high volume lending is more efficient and ‘safer’ than almost every type of other riskier lending to the micro-medium sized business.  That’s a simple fact of banking and isn’t likely to change any time soon.  So don’t get angry with your bank, if you were in their shoes, you’d probably use the same principal: low risk

ETR Overview

Credebt Exchange® was founded in 2011, specifically to address two important issues in the economy: 1. liquidity in the micro-medium business sector; and 2. providing a strong, stable, cash equivalent alternative to bank deposits for Investors. Trading commenced in July, 2013 and Credebt Exchange® continues to deliver on its commitments to both businesses and Investors.

ETR Overview

The Investor’s yield is achieved by purchasing Exchange Traded Receivables [ETR] at a discount. As explained in the ETR Fact Sheet, ETR are invoices issued under Contract for goods and services supplied to investment quality companies or credit insured invoices from Investment Grade [IG] insurers. ETR provide Investors with:


  • ETR payable by investment quality companies
  • 100% ETR Repurchase (see AIG in the ETR Fact Sheet)
  • 4-Tier capital protection (see ETR Overview)


  • Using RPA, typical investment period is 1-Year revolving
  • Full or partial redemption available on request
  • No ‘break charges’ or early redemption fees

Tax Efficient

  • Significantly tax efficient for individuals with annual exemption
  • Subject to status, may be off-set against capital losses
  • Individual’s return taxed as a capital gain


  • Substantial increase on comparable bank deposit rates
  • Capital not committed for long periods, or years
  • Higher yield than alternative cash equivalents