Payday Library

Module 5 of 8

Cash and working capital

The cash conversion cycle, credit terms and early-payment discounts, a 13-week cash forecast, and collections and credit risk, worked through Alder Print Works and Hartley Plumbing.

Lesson 1.5 shows that profit and cash are different numbers. This module follows the cash. It starts with the working capital that growing a business ties up, then prices the credit terms that move cash between buyers and sellers, builds a weekly forecast that shows a shortfall before it arrives, and ends with receivables that never get collected. Alder Print Works, a fictional print shop, carries the first, second and fourth lessons because it has inventory, receivables and payables. Hartley Plumbing carries the forecast.

  1. 5.1Working capital and the cash conversion cycleHow inventory, receivables and payables tie up cash, how to measure the days, and why growth consumes cash before it makes any.40 min
  2. 5.2Credit terms and early-payment discountsHow to read terms like 2/10 net 30, the rate they imply, and when to pay early or offer a discount.35 min
  3. 5.3The 13-week cash forecastA direct weekly forecast from billings, bills and one-off payments, with a minimum balance and what to do when it is breached.45 min
  4. 5.4Collections, aging and credit riskAn aged receivables report, an allowance from loss rates, and the break-even odds of selling on credit.40 min

Templates in this module

These templates are in the Accounting and Finance Toolkit, Complete Track 1. Each lesson shows the method and the worked numbers, so you can build the same file in any spreadsheet.