Most business owners know the feeling: you’ve got invoices out, stock on shelves, and bills due next week. But how much cash can you really count on? That’s where gross working capital comes into play—a financial health check that’s never been more relevant for Australian businesses than in 2025.
What Is Gross Working Capital?
Gross working capital is the total value of a business’s current assets. Think of it as every dollar your company can access within a year—cash, accounts receivable, inventory, marketable securities, and even short-term investments.
- Cash at bank: Your operating cash, ready for payroll or bills.
- Accounts receivable: Money owed to you by customers.
- Inventory: The value of products ready for sale.
- Short-term investments: Assets that can be quickly converted to cash.
Unlike net working capital—which subtracts current liabilities—gross working capital gives you the full picture of your business’s liquidity potential.
Why Gross Working Capital Matters in 2025
After a volatile few years, 2025 is seeing a renewed focus on business resilience. The Albanese government’s continued support for SMEs, including the extension of the $20,000 instant asset write-off, means more companies are investing in growth. But with higher interest rates and supply chain pressures lingering, cash flow gaps remain a top risk.
Here’s why gross working capital deserves a spot on your dashboard:
- Weathering economic shocks: High gross working capital helps cushion against delayed customer payments or unexpected expenses.
- Seizing new opportunities: Ready access to cash means you can act fast—whether it’s buying discounted stock or taking on a big contract.
- Creditworthiness: Lenders and investors often assess gross working capital to gauge your ability to repay loans or finance expansion.
For example, a Victorian manufacturer that invested heavily in inventory ahead of predicted supply chain bottlenecks in early 2025 was able to fulfil orders while competitors faced shortages—thanks to a solid gross working capital position.
How to Optimise Gross Working Capital
Boosting gross working capital isn’t about hoarding cash—it’s about smart management of assets. Here are practical strategies:
- Streamline receivables: Use e-invoicing and automated reminders to speed up collections. In 2025, many Australian businesses are leveraging Open Banking tools to track and chase payments more efficiently.
- Balance inventory: Leverage AI-powered forecasting to avoid overstocking or stockouts. Retailers are increasingly adopting cloud-based inventory systems for real-time insights.
- Maximise short-term returns: Park surplus cash in high-interest business savings accounts or short-term term deposits. With the RBA’s cash rate hovering around 4.1% in early 2025, returns on cash are more attractive than in recent years.
Tip: Regularly review your gross working capital ratio (current assets/total assets) to benchmark against your industry. The right balance depends on your sector—retailers often need higher ratios than service businesses.
Common Pitfalls and How to Avoid Them
Even profitable businesses can stumble if they neglect working capital:
- Relying on delayed payments: Long payment terms can artificially inflate gross working capital. Watch for overdue invoices.
- Excess inventory: Inventory ties up cash and can become obsolete—especially in fast-moving sectors like tech or fashion.
- Ignoring seasonality: Plan for peaks and troughs in cash flow, especially if your business is cyclical.
In 2025, digital tools like Xero and MYOB’s working capital dashboards make it easier than ever to monitor and optimise your position in real time.
