Quick answer: Working capital finance covers the gap between money going out of your business and money coming in. In South Africa, the main options are a working capital loan, a business overdraft, invoice discounting, and purchase order funding — each suited to a different kind of gap. New Heights Finance, as a broker, helps match your specific cash-flow situation to the right facility and lender, rather than selling one fixed product.
Related: Short-term business loans · Revolving credit facility · Business line of credit
Key facts
| What it solves | The timing gap between paying costs and receiving payment from customers |
| Main forms | Working capital loan, business overdraft, invoice discounting, PO funding |
| Term | Ranges from revolving/ongoing to a short fixed term, depending on the form |
| Security | Varies by form and lender — unsecured, asset-secured, or secured against invoices/orders |
| Who arranges it | New Heights Finance, as a broker, across a panel of lenders |
What is working capital finance?
Working capital is the cash a business has available to cover its day-to-day costs — wages, stock, rent, suppliers — before customer payments come in. Working capital finance is any funding used to bridge a shortfall in that cycle, rather than to buy a long-term asset or fund expansion.
The gap is usually caused by timing: you pay suppliers before your customers pay you, or a seasonal spike in orders means costs rise before revenue catches up.
The four main ways to fund a working capital gap
1. A working capital loan
A lump sum, repaid over a set period (often short to medium term), used to smooth a cash-flow gap or fund a specific working-capital need. See short-term business loans if your need is a single, defined event rather than an ongoing cycle.
2. A business overdraft
A facility attached to your business bank account that lets you go into a limited negative balance and pay interest only on what you use. Typically arranged through your bank, though not exclusively.
3. Invoice discounting
You draw funding against the value of unpaid customer invoices, rather than waiting the usual 30–90 days for them to be paid. See our invoice discounting page for detail.
4. Purchase order funding
Funding to fulfil a confirmed customer order before you’re paid, used when the order itself — not an existing invoice — is the constraint. See our purchase order funding page for detail.
There are also revolving structures — a revolving credit facility or a business line of credit — which give ongoing access to funds you draw and repay repeatedly, rather than a single lump sum.
How do I choose between them?
| Your situation | Likely fit |
|---|---|
| A one-off, defined gap (stock, a big order) | Short-term business loan |
| An ongoing, recurring cash-flow cycle | Working capital loan or revolving credit facility |
| Flexible, repeated access without reapplying each time | Revolving credit facility or business line of credit |
| Customers pay on invoice but slowly | Invoice discounting |
| You’ve won an order but need funds to fulfil it | Purchase order funding |
| You want a standing buffer attached to your bank account | Business overdraft (via your bank) |
This is a general guide, not financial advice — the right fit depends on your specific numbers, security, and the lenders willing to fund your business.
What does working capital finance cost?
Cost varies by facility type, lender, amount, and your risk profile, so no single rate applies across all four options. As a broker, New Heights Finance’s role is to lay out the real options so you can compare total cost, not just the headline rate.
Can I get working capital finance with bad credit or as a startup?
It depends on the facility and the lender. Invoice discounting and PO funding are often assessed more on your customer’s or the order’s strength than your own credit record, which can make them accessible even where a straight loan wouldn’t be. A working capital loan or overdraft more often weighs your own trading history and turnover. No approval is ever guaranteed.
FAQs
What’s the difference between a working capital loan and a business overdraft?
A working capital loan is typically a lump sum with a fixed repayment schedule. An overdraft is a flexible facility on your bank account that you draw down and repay as needed, paying interest only on what you use.
Is working capital finance secured or unsecured?
It depends on the form. Invoice discounting and purchase order funding are effectively secured against the invoice or order itself. A working capital loan may be arranged on an unsecured basis or secured against business assets, depending on the lender.
How is working capital finance different from a revolving credit facility?
A revolving credit facility is one way to fund working capital — it gives you an ongoing limit you draw down and repay repeatedly. A working capital loan is usually a single lump sum with a fixed term. See our revolving credit facility page for detail.
Which working capital option is fastest to arrange?
Speed depends on the lender and how complete your documentation is, rather than the facility type alone.
Does New Heights Finance lend the money directly?
No. New Heights Finance is a broker and arranges working capital funding by matching your application to lenders on its panel.
Ready to explore your working capital options? Apply for business finance online in minutes.