Module 4: Cash Flow & Working Capital
Six chapters connecting accounts receivable to the bigger financial picture: what working capital actually is, the cash conversion cycle simplified for a services business, forecasting real cash from your aging report, the true dollar cost of a slow DSO, bridging gaps with a line of credit, and building a full 13-week cash flow forecast.
What Is Working Capital, and Why Does AR Matter to It?
A clear explanation of working capital, how it's calculated, and why accounts receivable is usually the single largest lever a services firm has to improve it.
The Cash Conversion Cycle Explained
How the cash conversion cycle formula works, why it simplifies dramatically for a professional services firm, and a real 2024 industry benchmark.
Forecasting Cash Flow From Your Receivables
How to turn your current aging report into a realistic projection of when cash will actually arrive, using payment-pattern-based assumptions.
The Real Cost of a Slow DSO
Going beyond the basic dollar impact from Module 1 to understand DSO's true cost: financing costs, opportunity cost, and how to think about it like a CFO would.
Using a Line of Credit to Bridge AR Gaps
How a business line of credit can bridge the cash gap AR creates, what it costs, and when it makes sense versus simply tightening collections.
Building a 13-Week Cash Flow Forecast
How to build a rolling 13-week cash flow forecast that combines AR collections with the rest of your business's cash movement, the practical capstone tool for this module.