Temporary Working Capital
Short definition
Temporary working capital is the OWC peak above the floor from season, campaigns or projects. Funding it with a short line and a cash buffer is closer to a tenor match.
Detailed explanation
The peak’s duration (weeks/months) chooses the instrument. Campaign AR to factoring, seasonal stock to a short loan, a one-off project advance to the contract. Whether the peak stays “temporary” depends on collections actually reversing.
Inflation and trend growth turn temporary peaks into a new floor. The 13-week budget shows the cash timing of the peak; the annual average hides it.
Why it matters for the CFO
How much of the line “should repay” hangs on this definition. A peak that never recedes is a hidden permanent need.
How to read it
Peak − floor = seasonal swing. If the swing grows and the floor is also drifting, growth stock is mixed in.
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Definitions are educational. They are not investment, credit or tax advice.