Working Capital as Value Driver
A 10-day improvement in days sales outstanding across a $100M revenue business generates approximately $2.7M in cash — the equivalent of several percent of equity value at typical private company multiples.
Receivables Management
Accounts receivable management — billing accuracy, collections efficiency, credit policy discipline, and customer payment term optimization — is often the largest working capital opportunity in service and distribution businesses.
Inventory Optimization
Inventory carrying costs (typically 20-30% annually including capital costs, storage, obsolescence, and insurance) make inventory minimization a powerful cash flow improvement lever in product-based businesses.
Payables Strategy
Extending vendor payment terms — through early payment programs, supply chain financing, or simple negotiation — generates interest-free working capital financing that improves cash conversion cycles.
More insights from IKON Group Investments.