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Introducing Modern Working Capital Techniques Transform an Invoice into a Digital Bill of Exchange Streamline YOUR Purchasing Department!
What Really Is Working Capital?
Share Capital
This is the money that you (or the Founders of YOUR Business) put into the venture to get it off the ground, so to speak.
In the case of a company you would buy Shares in the company to achieve this end. If you retain profits in your company as it develops these profits supplement the amount originally invested. Losses of course would reduce the Capital amount.
Preference Share Capital
Instead of investing into Ordinary Capital of a business, an investor maybe wants the amount paid in to be secured somewhat. Therefor he purchases Preference Shares. This means that this category of shares is secured by a fixed asset like Land and Buildings, which now cannot be disposed of until the holders of the Preference Shares have been paid out first.
Loan Capital
Instead of buying shares sometimes an investor simply prefers to lend money to a developing business to secure the same ends as Share Capital would. In this case he foregoes the right in participating in the profits of the company by way of Dividends, instead he lends the money taking an interest on the amount invested, or he lends free of interest, with specific terms of repayment, or makes no such terms. The Investor can or prefer not to take some form of security from the company to give a sense of safety to the investment.
