Working capital release
The cash is already yours. It is just not in the bank.
Growing companies fund their growth twice: once through the P&L, and again through a balance sheet that quietly absorbs cash faster than sales rise. Most of it is recoverable.
Revenue doubles. Receivables more than double, because the sales team wins new accounts on longer terms and nobody re-reads the credit policy. Inventory climbs to protect service levels. Payables get squeezed by suppliers who noticed you are growing.
The result is a profitable business that is permanently short of cash, funding its own growth on an overdraft, and paying interest for the privilege.
None of that shows up in the profit and loss account. All of it shows up in the bank balance.
The four numbers
Where the money actually sits
Every working capital problem resolves into four measurements. Together they say how many days of cash your operations are holding.
| Measure | What it tells you | Where the problem usually hides |
|---|---|---|
| DSO Days sales outstanding |
How long customers take to pay you | One or two large accounts on terms nobody approved, plus invoices disputed for reasons that were never resolved |
| DIO Days inventory outstanding |
How long stock sits before it sells | Slow-moving and obsolete lines carried at full value, and safety stock set years ago for a smaller business |
| DPO Days payables outstanding |
How long you take to pay suppliers | Paying faster than the agreed terms, and early-payment discounts either missed or taken when the cash was worth more |
| CCC Cash conversion cycle |
DSO + DIO − DPO: net days your cash is locked in operations | The number that decides how much overdraft you need to run the business at all |
The engagement
How the diagnostic runs
A fixed-scope piece of work with a defined deliverable, run over three to four weeks. It is deliberately structured so you can judge the quality of the thinking before committing to anything longer.
It needs your last three years of financials, the receivables and inventory ledgers, and about four hours of your finance team's time.
-
Measure
DSO, DIO, DPO and the cash conversion cycle, calculated from your actual ledgers rather than the annual accounts — then set against how the business was running two and three years ago.
-
Locate
Receivables broken down by customer and ageing. Inventory by category and turn. Payables by supplier and terms. This is where the answer stops being a ratio and starts being a name.
-
Quantify
What each correction is worth in rupees, how long it takes, and what it would cost you operationally to make it. Including the ones we would not recommend.
-
Sequence
A prioritised release plan with an owner and a date against each item, and a way of tracking whether the cash actually arrives.
What good looks like
Typical outcomes
Ranges observed across mid-market engagements of this kind. What your business can release depends on where it is starting from — which is exactly what the diagnostic establishes.
off the cash conversion cycle
reduction in working capital as a share of revenue
cash released, depending on the scale of the business
And then
What the diagnostic usually turns up
Trapped cash is a symptom. The work almost always surfaces the thing causing it.
No forward view of cash
The business knows its bank balance today and has no reliable picture of it in March. A 13-week rolling forecast fixes this in weeks.
A credit policy nobody wrote down
Terms are set deal by deal by whoever closed the sale. Nobody owns collections, so nobody is measured on them.
Inventory planned for a smaller company
Reorder levels and safety stock set when the business was a third of its current size, never revisited.
Management information that arrives too late
A close taking 15 to 20 days means decisions are made on numbers that are three weeks stale.
Fixing those is a longer conversation. It is usually the point at which a company decides it wants a CFO in the room every month rather than once. What that involves
Common questions
How much working capital is typically trapped in a company of our size?
In our experience with companies between Rs 200 and Rs 1,000 crore, somewhere between 10 and 20 per cent of working capital can usually be released without changing the business model. On a company holding Rs 250 crore of working capital, that is Rs 25 to Rs 50 crore. The figure depends far more on how the business buys and collects than on which sector it is in.
How long does it take to see the cash?
The diagnostic itself takes three to four weeks. Release typically lands over the following three to five months, because collections, credit terms and inventory all move slowly. Anyone promising cash inside 30 days is describing a one-off squeeze on suppliers, not a structural improvement.
Will this damage our customer and supplier relationships?
It should not, and that is a design constraint rather than a hope. Most of the release comes from correcting invoicing errors, tightening a credit policy that was never written down, and clearing stock that is not moving. Renegotiating supplier terms is part of the work, but it is a conversation, not an ultimatum.
We already have a CFO and a finance team. What would you add?
An outside pair of eyes and the time to use them. A working finance team is running the close, the audit and the compliance calendar. Very few have three uninterrupted weeks to take the receivables ledger apart customer by customer, which is where the answer usually is.
Do you work outside Kolkata?
Yes. The analysis is done remotely from your data, with on-site visits at the start of the engagement and at each review point. We work with companies across India.
Find out what is trapped
Thirty minutes with Dr. Mookerjee. Bring your last set of accounts and we can usually give you a rough sense of the number on the call itself.