Growth can require cash before new customers pay. Purchasing goods, building inventory and granting payment terms create a funding gap. This educational note describes a simplified model, rather than advice for a specific entity.
Understand the operating cycle
Simplified operating working capital is inventory plus trade receivables minus trade payables. A full assessment can include other operating assets and liabilities. Cash balance and accounting profit are separate measures.
Fictional example — million GNF
Inventory of 120 plus receivables of 180 minus supplier payables of 100 creates a requirement of 200. A growth scenario with 150, 240 and 130 respectively creates a requirement of 260. The additional need is 60. These figures are fictional and do not represent a BS Conseils client.
Build a useful forecast
Start with reconciled opening cash. Schedule expected receipts and payments by week, using contractual dates and documented assumptions. Carry each closing balance into the next period. Review overdue receivables, slow-moving inventory and committed expenditure with the relevant teams.
Mistakes to avoid
Treating sales as cash, counting a receipt twice, ignoring taxes or payroll, and relying on a single optimistic collection date. A simplified model is not a complete financing plan.
Recommended actions
Reconcile the starting data. Assign responsibility for collection actions. Prepare a thirteen-week cash forecast. Test delayed receipts. Review assumptions and decisions regularly.
Sources & verification
Institutional and publisher sources consulted on 12 October 2026. The note remains educational and should be reviewed for the entity’s circumstances.