5 Signs Your Business Needs Working Capital Now

5 Signs Your Business Needs Working Capital Now

Running a business means constantly juggling priorities. You are managing customers, employees, vendors, marketing, and a thousand other details every single day. In the middle of all that activity, it can be easy to miss the early warning signs that your business is running low on the cash it needs to operate effectively.

Working capital — the money available to cover your day-to-day expenses after accounting for short-term obligations — is the engine that keeps everything moving. When it dries up, problems compound quickly. The good news is that recognizing the signs early gives you time to act before a manageable situation turns into a crisis.

Here are five clear signals that your business needs working capital now, not next month.

Sign 1: Payroll Is Becoming Stressful

Payroll is non-negotiable. Your employees depend on their paychecks arriving on time, every time. If you find yourself scrambling to make payroll — checking bank balances nervously the day before payday, delaying vendor payments to free up cash for wages, or dipping into personal savings — that is a serious red flag.

Why this happens: The gap between when your business earns revenue and when that revenue actually lands in your bank account creates the payroll squeeze. A client might owe you $50,000 for work completed last month, but that invoice will not be paid for another 30 days. Meanwhile, your team needs to be paid on Friday.

What to do about it: A working capital loan or business line of credit provides the cash cushion that eliminates payroll stress. Once the receivables come in, you repay the advance and restore your balance. The cost of short-term financing is a fraction of the damage caused by late payroll, which includes damaged employee trust, potential legal liability, and turnover.

If payroll stress is a recurring issue rather than a one-time event, you should also examine whether your pricing covers your labor costs adequately and whether your payment terms with clients need to be tightened.

Sign 2: You Are Turning Down Opportunities

This is one of the most painful signs because you can see exactly what you are losing. A large order comes in, but you do not have enough cash to buy the materials to fulfill it. A competitor's lease is ending and their prime location is available, but you cannot cover the security deposit and build-out costs. A bulk purchasing discount from your supplier would save you 15 percent, but you do not have the cash to buy in volume.

Why this happens: Growth requires investment, and investment requires capital. A profitable business can still be cash-poor if its money is tied up in inventory, receivables, or fixed assets. Without liquid working capital, you are forced to pass on opportunities that your competitors will gladly take.

What to do about it: Securing working capital before opportunities arise ensures you are ready to act when they do. A business line of credit is particularly effective here because you only pay interest on what you draw, so you can have capital available without paying for it until you need it. When that large order or expansion opportunity appears, you draw what you need, execute, and repay from the proceeds.

For retail store owners, this often manifests as the inability to stock up before a major sales season. A working capital injection before the holidays or back-to-school season can dramatically increase annual revenue.

Sign 3: Seasonal Revenue Dips Are Hitting Harder

Almost every business has seasonal patterns. Landscapers slow down in winter. Tax preparers are quiet from May through December. Restaurants in tourist areas see traffic drop after summer. These patterns are predictable, and that predictability is actually an advantage — because you can plan for them.

The problem arises when you have not built up enough of a cash reserve during the busy months to carry you through the slow ones. If you are cutting services, reducing staff hours, deferring maintenance, or falling behind on vendor payments during your off-season, you need a working capital strategy.

Why this happens: Seasonal businesses often invest their peak-season profits back into the business or use them to catch up on expenses deferred from the previous slow period. This creates a cycle where there is never quite enough cash saved to weather the next downturn.

What to do about it: The most effective approach is to secure working capital financing before your slow season begins. Apply when your financials look their strongest — during or just after your peak season — and use the funds to maintain operations through the valley. Repay aggressively when revenue picks back up.

Some business owners establish a line of credit during their busy season and leave it untouched until they need it, essentially creating an insurance policy against seasonal cash flow dips.

Sign 4: Inventory Shortages Are Costing You Sales

If you regularly run out of popular products, cancel appointments because you do not have supplies, or turn away customers because the item they want is out of stock, you are leaving revenue on the table. Inventory shortages do not just cost you the immediate sale — they cost you customer loyalty. A customer who cannot buy what they came for today may not come back tomorrow.

Why this happens: Maintaining adequate inventory levels requires capital that many businesses do not have readily available, especially if they carry a wide range of products or deal with long supplier lead times. The problem gets worse when you are growing because increased demand means you need to hold more inventory, which ties up more cash.

What to do about it: Inventory financing or a working capital loan dedicated to stock purchases keeps your shelves full and your customers happy. Calculate the revenue you lose to stockouts each month and compare it to the cost of financing the inventory. In most cases, the math strongly favors borrowing.

For businesses with particularly seasonal inventory needs — holiday merchandise, seasonal food items, summer gear — timing your inventory financing to arrive well before the demand surge is critical. Running out of stock during your busiest week of the year is an unrecoverable loss.

Sign 5: Growth Has Stalled Despite Demand

This is perhaps the most frustrating sign of all. You have the customers. You have the demand. You have the talent. But you cannot grow because you do not have the capital to invest. You are stuck in a holding pattern where the business earns enough to survive but not enough to expand.

Why this happens: Growth requires upfront investment that pays off over time. Hiring a new employee costs you money for weeks or months before that employee generates enough revenue to cover their salary. Opening a new location requires lease deposits, renovations, and inventory before the first customer walks through the door. Launching a marketing campaign costs money today for results that materialize over the next quarter.

Without working capital to fund these investments, you end up in a catch-22: you need to grow to earn more money, but you need more money to grow.

What to do about it: Working capital financing breaks the cycle. A term loan, line of credit, or even a short-term advance gives you the capital to make strategic investments while your existing operations continue to generate revenue. The key is choosing the right financing structure for the timeline of your growth initiative.

If you are hiring, a six-to-twelve month term loan matches the ramp-up period for new employees. If you are expanding to a new location, a longer-term loan or SBA product may be more appropriate. If you are investing in marketing, a line of credit lets you scale spending up or down as you measure results.

Taking Action Before the Crisis

The common thread in all five signs is that early action prevents small problems from becoming large ones. Waiting until you cannot make payroll or until you have lost your third major customer to a stockout makes the situation harder and more expensive to fix.

Here are three proactive steps every business owner should take:

Monitor your working capital ratio monthly. Divide your current assets by your current liabilities. If the ratio drops below 1.2, it is time to start exploring financing options. If it drops below 1.0, you need to act immediately.

Establish a line of credit before you need it. The best time to borrow is when your financials are strong and you do not desperately need the money. Having an established credit line gives you instant access to capital when any of the five signs appear.

Build a cash reserve. Aim to keep at least two months of operating expenses in a separate savings account. This buffer gives you time to arrange financing without making panicked decisions.

How Brevo Capital Can Help

If you recognize any of these five signs in your business, Brevo Capital can help you find the right working capital solution. Our network includes lenders who specialize in fast funding for businesses at every stage, from startups to established companies managing seasonal cycles.

The application takes minutes, decisions come back within hours, and funding can arrive as soon as the next business day.

Start your application now and give your business the working capital it needs to thrive.