2 min read
Definition
Temporary working capital is the fluctuating extra working capital a business needs above its permanent base — the additional stock and debtors funded during busy periods, seasonal peaks or growth spurts, which fall away again when activity subsides.
In plain terms
A retailer building stock for Christmas, or a firm funding a big new contract, needs extra cash for a while and then releases it. That temporary need is best matched with flexible finance drawn when required and repaid when the peak passes.
Why it matters
Matching temporary working capital to short, flexible facilities — an overdraft or revolving facility — rather than long-term debt keeps funding efficient. See permanent working capital.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.