{"id":195621,"date":"2023-09-28T07:27:24","date_gmt":"2023-09-28T14:27:24","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=195621"},"modified":"2024-08-05T09:13:13","modified_gmt":"2024-08-05T16:13:13","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>Capital allows a business to operate. It is an essential part of any business operation and can generally be categorized into two types: fixed and working capital. Fixed and working capital are both vital to a small business. Fixed capital includes the assets or investments needed to start and maintain a business, like property or equipment. <a href=\"https:\/\/www.nationalfunding.com\/blog\/what-is-working-capital-and-how-can-it-help-my-small-business\/\">Working capital<\/a> is the cash or other liquid assets that a business uses to cover daily operations, like meeting payroll and paying bills.<\/p>\n<p>While both fixed and working capital are necessary for running a successful business, they are two distinct types of capital.\u00a0It\u2019s important to understand the differences between the two and know the assets your business has in both types of capital. Here we\u2019ll outline the key differences between fixed and working capital.<\/p>\n<h2>What Is Fixed Capital?<\/h2>\n<ul>\n<li>Fixed capital includes property, facilities, equipment and tools that your business uses on an ongoing basis. <a href=\"https:\/\/www.entrepreneur.com\/encyclopedia\/balance-sheet\" target=\"_blank\" rel=\"noopener noreferrer\">Entrepreneur<\/a> lists some additional examples of long-term assets. These are assets often needed to start and operate a business.<\/li>\n<li>These assets include vehicles, real estate, commercial ovens and <a href=\"https:\/\/www.nationalfunding.com\/industries\/loans\/construction\/\">construction equipment.<\/a> They are not easily liquidated (or turned to cash) but they may be resold and reused at any time. The amount of fixed capital a business requires varies by business and industry.<\/li>\n<li>Fixed-capital investments are usually depreciated on the company&#8217;s accounting statements over a long period of time, but can sometimes be deducted all at once with the <a href=\"https:\/\/www.nationalfunding.com\/equipment-leasing\/section-179-tax-deductions\/\" target=\"_blank\" rel=\"noopener noreferrer\">Section 179 deduction<\/a>.<\/li>\n<li>Fixed capital supports the business indirectly and serves over a long period of time.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone\" title=\"Male worker going through paperwork while looking through machine parts in steel factory\" src=\"https:\/\/www.nationalfunding.com\/blog\/wp-content\/uploads\/2019\/11\/youngworkergoingthroughp_745766.jpg\" alt=\"Male factory worker restocks inventory bought with working capital \" width=\"500\" height=\"334\" \/><\/p>\n<h2>What Is Working Capital?<\/h2>\n<ul>\n<li>Working capital is the difference between a company&#8217;s current assets (what you have) and liabilities (what you owe). To calculate your working capital ratio, you divide your current assets from your current liabilities. A score that falls between 1.5 and 2 is considered sufficiently healthy for a business.<\/li>\n<li>This figure measures how efficiently you&#8217;re operating, your company&#8217;s liquidity, and its short-term financial health.<\/li>\n<li>Working capital allows a business to expand. Without working capital, it&#8217;s difficult for a company to grow, pay off debts and become (or remain) profitable.<\/li>\n<li>Working capital directly supports the business by providing the funds used for daily operational expenses. It serves the business in the short-term, but is crucial to keep operations like payroll and supplies running smoothly.<\/li>\n<li>While fixed capital is strategic, working capital is operational for a business. It can be converted into cash assets immediately.<\/li>\n<\/ul>\n<p>Your company&#8217;s fixed capital or assets can help ensure its long-term health. They are vital for operations and customer service. Your company&#8217;s working capital ensures its short-term health. If you have cash or other liquid assets on hand, you can restock inventory, pay your employees on time, pay taxes and meet any other frequent obligations. Knowing the fixed and working capital for your business gives you great insight into the financial health of your business. It highlights areas to watch before making decisions. It helps you understand opportunities to streamline or grow your business, and gives potential investors or lenders insight into your business.<\/p>\n<p>Working capital is often an area a business needs support in, which is why they turn to short-term loans to cover business expenses or help growth. When <a href=\"https:\/\/www.nationalfunding.com\/blog\/small-business-owner-characteristics\/\">small business owners<\/a> come up short on working capital, they often turn to <a href=\"https:\/\/www.nationalfunding.com\/solutions\/working-capital-loans\/\" target=\"_blank\" rel=\"noopener noreferrer\">working capital loans<\/a> to fill the gaps.<\/p>\n<p><em>Originally published November 13, 2019. Updated on September 28, 2023.<\/em><\/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":12,"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=\"Fixed and working capital are both vital to a small business, but only one is crucial for long-term growth. Learn the major differences.\" \/>\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=\"Fixed and working capital are both vital to a small business, but only one is crucial for long-term growth. Learn the major differences.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.nationalfunding.com\/blog\/blog\/wp-json\/wp\/v2\/posts\/195621\" \/>\n<meta property=\"og:site_name\" content=\"The Bottom Line by National Funding\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/national.funding\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-09-28T14:27:24+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-08-05T16:13:13+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1440\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Nancy Mann Jackson\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@NationalFunding\" \/>\n<meta name=\"twitter:site\" content=\"@NationalFunding\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Nancy Mann Jackson\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/\",\"url\":\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/\",\"name\":\"Fixed and Working Capital: What's the Difference?\",\"isPartOf\":{\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg\",\"datePublished\":\"2023-09-28T14:27:24+00:00\",\"dateModified\":\"2024-08-05T16:13:13+00:00\",\"author\":{\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/#\/schema\/person\/ab47ea0172b062f504d67743a44f23fa\"},\"description\":\"Fixed and working capital are both vital to a small business, but only one is crucial for long-term growth. Learn the major differences.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#primaryimage\",\"url\":\"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg\",\"contentUrl\":\"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg\",\"width\":1440,\"height\":800},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.nationalfunding.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Fixed and Working Capital: What&#8217;s the Difference?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/#website\",\"url\":\"https:\/\/www.nationalfunding.com\/blog\/\",\"name\":\"The Bottom Line by National Funding\",\"description\":\"Read National Funding&#039;s small business blog for tips and suggestions on how to grow your business by focusing on different aspects of business operations.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.nationalfunding.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/#\/schema\/person\/ab47ea0172b062f504d67743a44f23fa\",\"name\":\"Nancy Mann Jackson\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.nationalfunding.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/7037ce183e3b47fa3f993f29900f50c411c6013897cc7985246c371d2fcc9438?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/7037ce183e3b47fa3f993f29900f50c411c6013897cc7985246c371d2fcc9438?s=96&d=mm&r=g\",\"caption\":\"Nancy Mann Jackson\"},\"description\":\"Nancy Mann Jackson is an award-winning journalist and content marketing writer who specializes in writing about finance, real estate, healthcare, small business and\u00a0human resources. Her work appears in\u00a0publications including CNBC.com, Fortune.com, Entrepreneur, Working Mother, CNNMoney.com, and DailyWorth,\u00a0and she writes for brands including HSBC Bank, Capital One, Glassdoor, Oracle, ADP, Cintas, Staples,\u00a0American Express, Acorns, Hospital Corporation of America and a number of others.\",\"url\":\"https:\/\/www.nationalfunding.com\/blog\/author\/nancy-mann-jackson\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Fixed and Working Capital: What's the Difference?","description":"Fixed and working capital are both vital to a small business, but only one is crucial for long-term growth. Learn the major differences.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/","og_locale":"en_US","og_type":"article","og_title":"Fixed and Working Capital: What's the Difference?","og_description":"Fixed and working capital are both vital to a small business, but only one is crucial for long-term growth. Learn the major differences.","og_url":"https:\/\/www.nationalfunding.com\/blog\/blog\/wp-json\/wp\/v2\/posts\/195621","og_site_name":"The Bottom Line by National Funding","article_publisher":"https:\/\/www.facebook.com\/national.funding\/","article_published_time":"2023-09-28T14:27:24+00:00","article_modified_time":"2024-08-05T16:13:13+00:00","og_image":[{"width":1440,"height":800,"url":"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg","type":"image\/jpeg"}],"author":"Nancy Mann Jackson","twitter_card":"summary_large_image","twitter_creator":"@NationalFunding","twitter_site":"@NationalFunding","twitter_misc":{"Written by":"Nancy Mann Jackson","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/","url":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/","name":"Fixed and Working Capital: What's the Difference?","isPartOf":{"@id":"https:\/\/www.nationalfunding.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#primaryimage"},"image":{"@id":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#primaryimage"},"thumbnailUrl":"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg","datePublished":"2023-09-28T14:27:24+00:00","dateModified":"2024-08-05T16:13:13+00:00","author":{"@id":"https:\/\/www.nationalfunding.com\/blog\/#\/schema\/person\/ab47ea0172b062f504d67743a44f23fa"},"description":"Fixed and working capital are both vital to a small business, but only one is crucial for long-term growth. Learn the major differences.","breadcrumb":{"@id":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#primaryimage","url":"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg","contentUrl":"https:\/\/blog.nationalfunding.com\/wp-content\/uploads\/2019\/11\/femalestockclerkcontroll_745771.jpg","width":1440,"height":800},{"@type":"BreadcrumbList","@id":"https:\/\/www.nationalfunding.com\/blog\/fixed-working-capital\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.nationalfunding.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Fixed and Working Capital: What&#8217;s the Difference?"}]},{"@type":"WebSite","@id":"https:\/\/www.nationalfunding.com\/blog\/#website","url":"https:\/\/www.nationalfunding.com\/blog\/","name":"The Bottom Line by National Funding","description":"Read National Funding&#039;s small business blog for tips and suggestions on how to grow your business by focusing on different aspects of business operations.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.nationalfunding.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.nationalfunding.com\/blog\/#\/schema\/person\/ab47ea0172b062f504d67743a44f23fa","name":"Nancy Mann Jackson","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.nationalfunding.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/7037ce183e3b47fa3f993f29900f50c411c6013897cc7985246c371d2fcc9438?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/7037ce183e3b47fa3f993f29900f50c411c6013897cc7985246c371d2fcc9438?s=96&d=mm&r=g","caption":"Nancy Mann Jackson"},"description":"Nancy Mann Jackson is an award-winning journalist and content marketing writer who specializes in writing about finance, real estate, healthcare, small business and\u00a0human resources. Her work appears in\u00a0publications including CNBC.com, Fortune.com, Entrepreneur, Working Mother, CNNMoney.com, and DailyWorth,\u00a0and she writes for brands including HSBC Bank, Capital One, Glassdoor, Oracle, ADP, Cintas, Staples,\u00a0American Express, Acorns, Hospital Corporation of America and a number of others.","url":"https:\/\/www.nationalfunding.com\/blog\/author\/nancy-mann-jackson\/"}]}},"_links":{"self":[{"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/posts\/195621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/comments?post=195621"}],"version-history":[{"count":11,"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/posts\/195621\/revisions"}],"predecessor-version":[{"id":208136,"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/posts\/195621\/revisions\/208136"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/media\/195620"}],"wp:attachment":[{"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/media?parent=195621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/categories?post=195621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationalfunding.com\/blog\/wp-json\/wp\/v2\/tags?post=195621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}