{"id":195621,"date":"2026-05-06T07:27:24","date_gmt":"2026-05-06T14:27:24","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=195621"},"modified":"2026-05-06T19:30:53","modified_gmt":"2026-05-07T02:30:53","slug":"fixed-working-capital","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/","title":{"rendered":"Fixed and Working Capital: What&#8217;s the Difference?"},"content":{"rendered":"<p><span data-contrast=\"auto\">Capital is any type of asset, including physical or financial, that is used to generate value through products and services. It can be divided into two types, working capital and fixed capital.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Fixed capital is any asset that is used for long-term growth and is a non-liquid asset. It is not intended to be sold and used to produce a product or service, cannot be fully used or converted into cash in a single accounting period, and is used for long-term productivity. Some assets like software and patents may be considered fixed capital or intangible assets depending on your accountant.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Working capital is the\u00a0liquid\u00a0assets including cash, accounts receivable, inventory and other assets that can be converted to cash\u00a0quickly, and\u00a0is used to fund day-to-day operations to keep the company operational. It can be calculated by subtracting current liabilities from current assets.<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Both fixed and working capital are needed for a business to be successful, and they have some\u00a0crossover. Your fixed capital can be a conveyor belt or assembly line and a machine that produces a product, while your working capital will cover the cost of the materials you use to produce the product and the employees that work on the assembly line.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/www.nationalfunding.com\/equipment-leasing\/\"><span data-contrast=\"none\">Equipment financing<\/span><\/a><span data-contrast=\"auto\">\u00a0can be used to\u00a0purchase\u00a0fixed capital like a machine to expand manufacturing so the business can increase output, while a\u00a0<\/span><a href=\"https:\/\/www.nationalfunding.com\/solutions\/working-capital-loans\/\"><span data-contrast=\"none\">working capital loan<\/span><\/a><span data-contrast=\"auto\">\u00a0can increase your working capital to pay for the materials and labor the fixed capital uses to increase production.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Here is some more information on what each one is, and how both help your company succeed by growing your revenue for the short and long term.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h2 aria-level=\"2\"><span data-contrast=\"auto\">What Fixed Capital Is<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:360,&quot;335559739&quot;:120}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"auto\">Fixed capital includes any long-term physical or non-physical asset a company invests in that can produce revenue or income repeatedly over multiple years.\u00a0As long as the asset is not used in a single transaction or accounting period, it is likely fixed capital.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Examples of fixed capital include:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">The land the company owns and the buildings on top of it.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Machinery, equipment, and vehicles.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">Technology including computers,\u00a0infrastructure\u00a0and systems.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">Solar panels, battery storage systems, and wind turbines.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">Display and retail fixtures, furniture in a restaurant or hotel, point of sale systems, and the equipment in a gym<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">There can be some assets that are for long term growth like your domain name or a\u00a0trademark, but\u00a0may be considered an intangible asset rather than fixed capital as they are not physical assets.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">The same goes with investment accounts that are not being held for long term and will\u00a0clear\u00a0or that can be liquidated in an accounting cycle, even though they can grow in time with dividend payouts. While there may be a physical piece of paper you can print, the actual asset is not physical.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Raw materials are also not\u00a0fixed\u00a0capital as they are used to produce goods and services and move in a regular business cycle. This makes the raw materials\u00a0working\u00a0capital while the machinery used to produce them is fixed capital.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h2 aria-level=\"2\"><span data-contrast=\"auto\">What Working Capital Is<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:360,&quot;335559739&quot;:120}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"auto\">Working capital is the money that a business\u00a0has to\u00a0cover day-to-day operations, or the assets the company is planning on\u00a0converting to\u00a0cash in a single accounting\u00a0cycle, and\u00a0is found by subtracting current liabilities from current assets.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">Working Capital = Current Assets &#8211; Current Liabilities<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559731&quot;:0}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">If\u00a0you\u2019re\u00a0a cheese and bread shop with $10,000 in cash, $2,000 in bread, and $3,000 in cheeses, you have $15,000 in current assets. When there are bills owed like $1,000 for flour and $500 for rent or utilities, and $500 for wages, your business has $2,000 in current liabilities. This means your working capital is $13,000\u00a0and you have plenty of room to\u00a0operate.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">When this same bakery has $10,000 in cash but increases bread and cheese to $5,000 and $8,000 for the holiday\u00a0season,\u00a0they now have $23,000 in current assets. The cost to produce the bread and cheese may have increased, and so did salaries and utilities.\u00a0Let\u2019s\u00a0also pretend you needed to take a business loan to replace an oven that costs $15,000 and\u00a0has to\u00a0be paid in full within 12 months. This increases the total amount of current liabilities to $28,000. Your company is now going to struggle to\u00a0operate.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">With that said, this number could be misleading. If holiday demand spikes and you have extra raw materials, you may be able to clear your current inventory, produce more\u00a0bread\u00a0and cheese, and pay off the debts during the busy season as sales will spike. But this is only if there is a busy season rush.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">Examples of assets that are working capital are:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Cash and cash equivalents including checking and savings accounts or treasury bills.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Accounts receivable, trade credit, and tax refunds.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">Inventory including ready-to-sell products on a shelf and the raw materials used to manufacture goods.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">Prepaid expenses like rent, utilities, software, and prepaid advertising spaces.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">Short-term loans\u00a0you provide vs. take,\u00a0including loans to customers and advancing an employee\u2019s salary.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">Examples of current liabilities are:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Accounts\u00a0payables\u00a0including utilities and rent you owe monthly payments.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Any outstanding invoices or payments\u00a0owed\u00a0to vendors, suppliers, and lenders.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><a href=\"https:\/\/www.nationalfunding.com\/small-business-loans\/short-term-business-loans\/\"><span data-contrast=\"none\">Short-term business loans<\/span><\/a><span data-contrast=\"auto\">\u00a0that have payment periods less than 12 months like a\u00a0<\/span><a href=\"https:\/\/www.nationalfunding.com\/solutions\/bridge-loan\/\"><span data-contrast=\"none\">business bridge loan<\/span><\/a><span data-contrast=\"auto\">\u00a0or the balance on a business line of credit.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">Taxes your business owes on including estimated, payroll withheld, and property for the land your company owns.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;}\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">Gift cards your customers\u00a0purchased, ticket sales for upcoming events or travel (tours or concerts), and other unearned forms of revenue.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:720,&quot;335559991&quot;:360}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">By\u00a0adding up\u00a0your current assets and current liabilities\u00a0you\u2019ll\u00a0be able to calculate your working capital. If you fall short and need a cushion to keep operations running, working capital loans like a payroll loan could be a solution.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Working capital and fixed capital are both types of assets that a business needs to succeed. Fixed capital is your\u00a0long-term\u00a0assets that produce value over the long run while working capital is meant to produce cash within a single accounting cycle.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><i><span data-contrast=\"none\">National Funding does not provide tax,\u00a0legal\u00a0or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax,\u00a0legal\u00a0and accounting advisors.<\/span><\/i><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:195,&quot;335559739&quot;:195}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fixed and working capital are both vital to a small business, but only one is crucial for long-term growth. We&#8217;ve outlined the major differences.<\/p>\n","protected":false},"author":38,"featured_media":195620,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[88,116,89,101,96,117,87,115],"class_list":["post-195621","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-health","tag-accounting-for-small-business","tag-accounting-tools","tag-budgeting-for-small-business","tag-construction","tag-inventory-management-tools","tag-payroll-tools","tag-section-179-tax-deductions","tag-tax-deductions-for-small-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Fixed and Working Capital: What&#039;s the Difference?<\/title>\n<meta name=\"description\" content=\"The difference between fixed and working capital is that one is for long term success and the other immediate needs. Here\u2019s how they work together.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fixed and Working Capital: What&#039;s the Difference?\" \/>\n<meta property=\"og:description\" content=\"The difference between fixed and working capital is that one is for long term success and the other immediate needs. 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