Family businesses often fund growth through bank facilities while significant cash sits idle in the working capital cycle.
This guide walks through a practical sequence for releasing that cash over one to two quarters.
Measure the cycle honestly
Start with days sales outstanding, days inventory outstanding and days payables outstanding, calculated consistently and reviewed monthly.
Averages hide problems. Segment by customer, product and branch to find where cash is actually stuck.
- Age receivables by customer and by reason for delay
- Separate fast moving inventory from slow and obsolete stock
- Compare supplier terms actually used against terms agreed
Fix the process, not just the number
Late payment is usually a process failure. Invoices issued late, missing documentation and unclear escalation paths cause more delay than customer unwillingness.
Tighten the order to cash process end to end, then set collection targets with named owners.
Inventory discipline
Set stock cover targets by category, review ageing monthly and agree a clearance policy for obsolete items before the year end.
Sustain the gains
Working capital improvements reverse quickly without reporting discipline. A monthly cash cycle review with operational leaders keeps the gains in place.
Key takeaways
- Segment the cycle rather than relying on group averages
- Treat collection delays as a process issue first
- Set stock cover and clearance policies by category
- Review the cycle monthly with operational owners present