Working Capital English
Learn to Talk About Working Capital in English
Working capital is one of the most important ideas in business. Companies need money every day to buy materials, pay employees and keep the business running.
On this page, you will learn important Working Capital English vocabulary and useful expressions. You will also practise reading, speaking and understanding English in realistic business situations.
Level: B1–B2
Suitable for: Finance, Purchasing, Logistics, Sales, Management and Business English learners.
What Is Working Capital?
Working capital is the money a company needs for its everyday business activities.
Most companies must pay their suppliers before their customers pay them. During this time, money is tied up in the business.
Good working capital helps a company pay its bills, buy materials and continue operating without financial problems.
A Simple Example
A company buys materials from a supplier. It must pay the supplier after 30 days. However, the company’s customer does not pay until 60 days later.
The company therefore needs enough money to finance the 30-day gap.
Key Working Capital Vocabulary
| English | German | Simple explanation |
|---|---|---|
| working capital | Betriebskapital / Nettoumlaufvermögen | Money available for everyday business activities. |
| supplier | Lieferant | A company that sells goods or services to another company. |
| customer | Kunde | A person or company that buys goods or services. |
| payment | Zahlung | Money paid for goods or services. |
| payment terms | Zahlungsbedingungen / Zahlungsziel | The agreed conditions and time period for payment. |
| inventory | Lagerbestand | Materials or products that a company keeps in stock. |
| cash flow | Cashflow / Geldfluss | Money moving into and out of a company. |
| liquidity | Liquidität | A company’s ability to meet its short-term payment obligations. |
| invoice | Rechnung | A document requesting payment for goods or services. |
| accounts receivable | Forderungen aus Lieferungen und Leistungen | Money that customers owe the company. |
| accounts payable | Verbindlichkeiten aus Lieferungen und Leistungen | Money that the company owes its suppliers. |
| due date | Fälligkeitsdatum | The date by which an invoice must be paid. |
| financing gap | Finanzierungslücke | The period between paying suppliers and receiving customer payments. |
| short-term financing | kurzfristige Finanzierung | Finance used for a limited period, often less than one year. |
| to tie up money | Geld binden | To make money temporarily unavailable for other purposes. |
Useful Business English Expressions
Read the English expressions aloud. The German translation is provided underneath.
We need to improve our working capital.
(Wir müssen unser Working Capital verbessern.)
Our cash flow has become tighter this quarter.
(Unser Cashflow ist in diesem Quartal knapper geworden.)
Our customers usually pay within sixty days.
(Unsere Kunden zahlen normalerweise innerhalb von sechzig Tagen.)
We have negotiated longer payment terms with our suppliers.
(Wir haben mit unseren Lieferanten längere Zahlungsziele ausgehandelt.)
Our inventory levels are currently too high.
(Unsere Lagerbestände sind derzeit zu hoch.)
Too much money is tied up in inventory.
(Zu viel Geld ist im Lagerbestand gebunden.)
We need to encourage customers to pay earlier.
(Wir müssen unsere Kunden dazu bewegen, früher zu zahlen.)
Late payments are affecting our liquidity.
(Verspätete Zahlungen beeinträchtigen unsere Liquidität.)
We are looking for additional short-term financing.
(Wir suchen nach einer zusätzlichen kurzfristigen Finanzierung.)
Reducing stock levels should improve our cash flow.
(Eine Verringerung der Lagerbestände sollte unseren Cashflow verbessern.)
Mini Reading: Sarah’s Working Capital Problem
Sarah is the finance manager of a medium-sized manufacturing company. The company produces components for the automotive industry.
Most customers pay their invoices after sixty days. However, the company must pay many of its suppliers after only thirty days.
This creates a thirty-day financing gap. During this period, the company must use its own money or arrange additional financing.
The company also has a large amount of inventory. Some materials remain in the warehouse for several months before they are used.
Sarah wants to improve the company’s working capital. She plans to reduce unnecessary inventory and ask customers to pay earlier.
True or False: Sarah’s Company
Decide whether the statements are True or False according to the reading.
1. Sarah works as a sales manager. ______ False
2. Sarah works for a medium-sized manufacturing company. ______ True
3. The company produces components for the automotive industry. ______ True
4. Most customers pay after thirty days. ______ False
5. Most customers pay after sixty days. ______ True
6. The company pays many suppliers after thirty days. ______ True
7. The company has a sixty-day financing gap. ______ False
8. The financing gap lasts thirty days. ______ True
9. The company may need additional financing. ______ True
10. The company has very little inventory. ______ False
11. Some materials remain in the warehouse for several months. ______ True
12. Sarah wants to increase unnecessary inventory. ______ False
13. Sarah wants customers to pay earlier. ______ True
Business Dialogue: Improving Working Capital
Read the dialogue aloud with a partner. The English is written in bold. The German translation appears underneath each sentence.
James: Good morning, Sarah. How is our working capital position? (Guten Morgen, Sarah. Wie sieht unsere Working-Capital-Situation aus?)
Sarah: It has improved slightly this month, but we still have some problems. (Sie hat sich diesen Monat leicht verbessert, aber wir haben immer noch einige Probleme.)
James: What is the biggest problem at the moment? (Was ist im Moment das größte Problem?)
Sarah: Several important customers are paying their invoices late. (Mehrere wichtige Kunden bezahlen ihre Rechnungen verspätet.)
James: How late are the payments? (Wie spät kommen die Zahlungen?)
Sarah: Some invoices are being paid twenty or thirty days after the due date. (Einige Rechnungen werden zwanzig oder dreißig Tage nach dem Fälligkeitsdatum bezahlt.)
James: That must be affecting our cash flow. (Das muss sich auf unseren Cashflow auswirken.)
Sarah: Yes, it is. We also have too much money tied up in inventory. (Ja, das tut es. Außerdem ist zu viel Geld in unserem Lagerbestand gebunden.)
James: Should we reduce our stock levels? (Sollten wir unsere Lagerbestände reduzieren?)
Sarah: Yes, but we need to be careful. We must still have enough materials for production. (Ja, aber wir müssen vorsichtig sein. Wir müssen weiterhin genügend Materialien für die Produktion haben.)
James: What can we do about the late customer payments? (Was können wir gegen die verspäteten Kundenzahlungen tun?)
Sarah: We could contact customers earlier and remind them before the invoices are due. (Wir könnten die Kunden früher kontaktieren und sie vor Fälligkeit der Rechnungen daran erinnern.)
James: Could we offer a discount for early payment? (Könnten wir einen Rabatt für eine frühzeitige Zahlung anbieten?)
Sarah: That is certainly worth considering. (Das ist auf jeden Fall eine Überlegung wert.)
James: Good. Please prepare a short proposal for our next meeting. (Gut. Bitte bereiten Sie einen kurzen Vorschlag für unser nächstes Meeting vor.)
Sarah: I’ll have it ready by Friday. (Ich werde ihn bis Freitag fertig haben.)
True or False: The Business Dialogue
1. The company’s working capital has improved slightly. ______ True
2. All customers are paying their invoices early. ______ False
3. Some invoices are paid after the due date. ______ True
4. Late payments are affecting the company’s cash flow. ______ True
5. The company has no money tied up in inventory. ______ False
6. Sarah wants to remove all materials from the warehouse. ______ False
7. The company still needs enough materials for production. ______ True
8. Sarah suggests contacting customers before invoices are due. ______ True
9. James suggests charging customers more for early payment. ______ False
10. Sarah will prepare a proposal by Friday. ______ True
Discussion Questions
Discuss the questions with a partner or answer them in complete sentences.
- Why do customers sometimes pay invoices late?
- How can a company encourage customers to pay earlier?
- Why can high inventory levels be a problem?
- Is it always a good idea to reduce inventory?
- What are the advantages of longer supplier payment terms?
- Can a profitable company still have liquidity problems?
- Who is responsible for working capital in a company?
- How can sales employees help improve working capital?
Grammar in Context
1. Present Perfect
We often use the present perfect to describe a development or change that is connected with the present.
We have reduced our inventory this year.
(Wir haben unseren Lagerbestand dieses Jahr reduziert.)
Our working capital has improved since January.
(Unser Working Capital hat sich seit Januar verbessert.)
2. Modal Verbs
Modal verbs are useful when making recommendations or discussing possibilities.
We should improve our cash flow.
(Wir sollten unseren Cashflow verbessern.)
We could offer a discount for early payment.
(Wir könnten einen Rabatt für eine frühzeitige Zahlung anbieten.)
3. First Conditional
We use the first conditional to describe a realistic future result.
If customers pay earlier, our liquidity will improve.
(Wenn die Kunden früher zahlen, wird sich unsere Liquidität verbessern.)
If we reduce inventory, we will release more cash.
(Wenn wir den Lagerbestand reduzieren, werden wir mehr Geld freisetzen.)
4. Passive Voice
The passive voice is common in finance because the process or result is often more important than the person performing the action.
Invoices are usually paid within thirty days.
(Rechnungen werden normalerweise innerhalb von dreißig Tagen bezahlt.)
Payment terms are agreed with each supplier.
(Die Zahlungsbedingungen werden mit jedem Lieferanten vereinbart.)
Common Mistakes Made by German Speakers
❌ We have many liquidities.
✔ We have good liquidity.
❌ We made a financing.
✔ We arranged financing.
❌ The customer paid too late the invoice.
✔ The customer paid the invoice late.
❌ We must reduce our warehouse.
✔ We must reduce our inventory.
❌ The money is bounded in stock.
✔ The money is tied up in stock.
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Complete the Sentences
Choose the correct answer. Only one answer is correct.
| No. | Sentence | A | B |
|---|---|---|---|
| 1 | Our customers usually pay their invoices ______. | ||
| 2 | Too much money is tied up ______. | ||
| 3 | We should negotiate longer payment terms ______. | ||
| 4 | Late customer payments can affect our ______. | ||
| 5 | If customers pay earlier, our ______ will improve. | ||
| 6 | Good working capital helps a company ______. | ||
| 7 | We need to reduce the amount of money tied up ______. | ||
| 8 | The finance manager wants customers ______ earlier. | ||
| 9 | Better payment terms can ______ working capital. | ||
| 10 | Reducing inventory can release more ______. |
Here are the two revised vocabulary exercises. The correct answers are now distributed randomly across A, B, C and D.
🧠 Working Capital Vocabulary Test 1
Click on the correct definition. The correct answer will appear in green. An incorrect answer will appear in dark red.
| No. | Word | A | B | C | D |
|---|---|---|---|---|---|
| 1 | Working capital |
Money paid as tax (Als Steuer gezahltes Geld) |
The total value of company buildings (Der Gesamtwert der Unternehmensgebäude) |
Money available for daily business activities (Geld für die täglichen Geschäftsaktivitäten) |
A company’s annual profit (Der Jahresgewinn eines Unternehmens) |
| 2 | Supplier |
A company that provides goods or services (Ein Unternehmen, das Waren oder Dienstleistungen liefert) |
A customer who pays late (Ein Kunde, der spät zahlt) |
A person who checks invoices (Eine Person, die Rechnungen prüft) |
A company that buys shares (Ein Unternehmen, das Aktien kauft) |
| 3 | Inventory |
A list of customers (Eine Liste von Kunden) |
Money borrowed from a bank (Von einer Bank geliehenes Geld) |
An employee’s monthly salary (Das Monatsgehalt eines Mitarbeiters) |
Goods and materials kept in stock (Auf Lager gehaltene Waren und Materialien) |
| 4 | Cash flow |
The number of employees in a company (Die Anzahl der Mitarbeiter in einem Unternehmen) |
A company’s marketing plan (Der Marketingplan eines Unternehmens) |
Money moving into and out of a company (Geld, das in ein Unternehmen hinein- und herausfließt) |
The price of raw materials (Der Preis von Rohstoffen) |
| 5 | Liquidity |
The amount of water used in production (Die in der Produktion verwendete Wassermenge) |
The value of a company’s website (Der Wert der Website eines Unternehmens) |
The length of a contract (Die Laufzeit eines Vertrags) |
The ability to meet short-term payment obligations (Die Fähigkeit, kurzfristige Zahlungsverpflichtungen zu erfüllen) |
| 6 | Invoice |
A delivery vehicle (Ein Lieferfahrzeug) |
A request for payment (Eine Zahlungsaufforderung) |
A bank account (Ein Bankkonto) |
A job application (Eine Bewerbung) |
| 7 | Payment terms |
The conditions and period agreed for payment (Die vereinbarten Bedingungen und Fristen für eine Zahlung) |
A list of unpaid taxes (Eine Liste unbezahlter Steuern) |
The price of a company’s products (Der Preis der Produkte eines Unternehmens) |
Rules about employee holidays (Regeln über den Urlaub von Mitarbeitern) |
| 8 | Accounts receivable |
Money invested in buildings (In Gebäude investiertes Geld) |
Money paid to employees (An Mitarbeiter gezahltes Geld) |
Money owed by customers (Geld, das Kunden dem Unternehmen schulden) |
Money owed to suppliers (Geld, das Lieferanten geschuldet wird) |
| 9 | Accounts payable |
Money that customers owe a company (Geld, das Kunden einem Unternehmen schulden) |
Money used for advertising (Für Werbung verwendetes Geld) |
Money held in a savings account (Geld auf einem Sparkonto) |
Money that a company owes its suppliers (Geld, das ein Unternehmen seinen Lieferanten schuldet) |
| 10 | Financing gap |
The period between paying suppliers and receiving customer payments (Der Zeitraum zwischen der Bezahlung von Lieferanten und dem Eingang von Kundenzahlungen) |
The distance between two warehouses (Die Entfernung zwischen zwei Lagern) |
A missing section in a report (Ein fehlender Abschnitt in einem Bericht) |
A difference between two product prices (Ein Unterschied zwischen zwei Produktpreisen) |
🧠 Working Capital Vocabulary Test 2
Choose the meaning or expression that best matches the word or phrase.
| No. | Word or phrase | A | B | C | D |
|---|---|---|---|---|---|
| 1 | Due date |
The date of the annual meeting (Das Datum der Jahresversammlung) |
The date a product was manufactured (Das Herstellungsdatum eines Produkts) |
The date by which payment must be made (Das Datum, bis zu dem gezahlt werden muss) |
The date an employee starts work (Das Datum des Arbeitsbeginns) |
| 2 | To tie up money |
To count banknotes (Banknoten zählen) |
To give employees a bonus (Mitarbeitern einen Bonus zahlen) |
To transfer money abroad (Geld ins Ausland überweisen) |
To make money temporarily unavailable (Geld vorübergehend binden) |
| 3 | Short-term financing |
A mortgage lasting thirty years (Eine Hypothek mit dreißigjähriger Laufzeit) |
Finance used for a limited period (Finanzierung für einen begrenzten Zeitraum) |
Money invested permanently (Dauerhaft investiertes Geld) |
A reduction in company tax (Eine Senkung der Unternehmenssteuer) |
| 4 | Late payment |
A payment made after the due date (Eine Zahlung nach dem Fälligkeitsdatum) |
A payment made in cash (Eine Barzahlung) |
A payment received before the invoice date (Eine Zahlung vor dem Rechnungsdatum) |
A payment made in another currency (Eine Zahlung in einer anderen Währung) |
| 5 | Early-payment discount |
A charge for late payment (Eine Gebühr für verspätete Zahlung) |
A reduction in employee salaries (Eine Kürzung der Mitarbeitergehälter) |
A price reduction for paying before the due date (Ein Preisnachlass für eine Zahlung vor dem Fälligkeitsdatum) |
A discount on old inventory (Ein Rabatt auf alte Lagerbestände) |
| 6 | Stock level |
The height of a warehouse shelf (Die Höhe eines Lagerregals) |
The price of a company’s shares (Der Kurs der Aktien eines Unternehmens) |
The number of company managers (Die Anzahl der Manager im Unternehmen) |
The amount of goods held in inventory (Die Menge der auf Lager gehaltenen Waren) |
| 7 | To improve liquidity |
To increase warehouse space (Die Lagerfläche vergrößern) |
To increase the company’s ability to meet short-term obligations (Die Fähigkeit des Unternehmens erhöhen, kurzfristige Verpflichtungen zu erfüllen) |
To employ more managers (Mehr Manager einstellen) |
To buy more office furniture (Mehr Büromöbel kaufen) |
| 8 | To arrange financing |
To reduce a customer’s order (Die Bestellung eines Kunden reduzieren) |
To write a financial newspaper article (Einen Finanzartikel schreiben) |
To organise access to borrowed or external funds (Den Zugang zu geliehenen oder externen Mitteln organisieren) |
To cancel a bank account (Ein Bankkonto kündigen) |
| 9 | To reduce inventory |
To stop selling products (Den Verkauf von Produkten einstellen) |
To close a warehouse permanently (Ein Lager dauerhaft schließen) |
To increase the number of products in stock (Die Anzahl der Produkte auf Lager erhöhen) |
To lower the amount of goods kept in stock (Die Menge der gelagerten Waren verringern) |
| 10 | To negotiate longer payment terms |
To demand immediate delivery (Eine sofortige Lieferung verlangen) |
To ask for a higher product price (Um einen höheren Produktpreis bitten) |
To ask for more time before payment is due (Um mehr Zeit bis zur Fälligkeit der Zahlung bitten) |
To cancel all supplier contracts (Alle Lieferantenverträge kündigen) |