Working capital is an amount, up to a maximum of 60 days, of expenditures the service center can retain to fund operations during fluctuations of revenue and expenditures. This is the maximum balance the service center can retain in its operating budget at any given time.
Acquiring working capital
Service centers can acquire working capital by using an existing surplus, adding surcharges to external users, or transferring funds from non-federal sources.
Service centers cannot acquire working capital by increasing rates to internal users.
The center calculates and MAA approves the amount of working capital retained by service centers. Recharge center working capital is approved by the appropriate Dean's/VP's office.
Calculating working capital
To calculate the maximum working capital the service center is allowed to retain, take an average of two months of operating expenditures over one or more years.
Example: The financial report shows cumulative expenditures for the fiscal year to be $150,000. The maximum balance a service center can retain in its operating budget is:
$150,000 / 12 months * 2 months equals $25,000.
Note: Working capital desired cannot exceed 60 days of operating expenditures.