Working Capital for Growth

How to learn with this guide

1. Read each explanation, then repeat the worked example without looking.
2. Follow the three-step method aloud and answer the check.
3. For feedback and a reworded attempt, return to the interactive lesson.
4. At the end, explain how the idea applies to your own industry.

LESSON 1 OF 4

Trace the cash cycle

Outcome: Identify the timing gap between paying suppliers and collecting from customers.

Concise briefing

Profit does not fund payroll until cash arrives. Inventory can be paid before it sells, and customers may pay after delivery. A cash-cycle timeline identifies the gap without assuming every invoice is collected on time.

Worked example

The distributor pays $30,000 for stock on day 0, delivers on day 30, and expects retailer payment on day 75. Cash is tied up from day 0 through collection; other expenses still have due dates.

Repeatable method

1. Mark the supplier payment date.
2. Mark delivery and the contractual customer due date.
3. Track actual collection and each intervening cash need.

LESSON 2 OF 4

Size the inventory commitment

Outcome: Calculate cash committed to an incremental order.

Concise briefing

Units times landed cost gives the inventory purchase requirement before extra handling and reserves. A larger order can improve revenue prospects while worsening near-term liquidity. Check what is committed versus already funded.

Worked example

An added 2,000 bars at $12 landed cost tie up $24,000. If $6,000 is due for storage and freight before collections, near-term cash need is $30,000 before a contingency.

Repeatable method

1. Multiply incremental units by landed unit cost.
2. Add expenses due before the first collection.
3. Compare that total with available cash and existing obligations.

LESSON 3 OF 4

Model the low-water mark

Outcome: Find the minimum projected cash across weeks.

Concise briefing

A closing cash figure rolls forward into the next week's opening. The minimum balance matters more than an attractive end-of-quarter figure because bills must be met at due dates. Model late collections as a separate scenario.

Worked example

Week 1 opens at $35k, collects $5k, pays $20k: closes $20k. Week 2 opens $20k, collects $3k, pays $28k: closes negative $5k. A later $40k collection does not prevent the week 2 gap.

Repeatable method

1. Carry each closing balance into the following week.
2. Add dated receipts and subtract dated outflows.
3. Flag the lowest balance and stress-test delayed receipts.

LESSON 4 OF 4

Choose a controlled response

Outcome: Compare timing, terms, and order size before committing.

Concise briefing

Do not treat a delayed supplier payment as cost savings. Options include smaller staged orders, confirmed customer deposits, negotiated terms, or suitable financing, each with constraints. Reforecast after every proposed change and document the underlying agreement.

Worked example

With a negative $5k low week, the distributor stages half the $24k order after supplier agreement, then models the new dates. It checks whether deliveries can still be met and whether later weeks remain positive.

Repeatable method

1. Test one realistic change at a time.
2. Recalculate all affected weeks and operational commitments.
3. Confirm terms in writing before relying on a changed date.

Final review

Close your notes and answer these in the interactive course. Revisit any missed lesson before attempting the reworded check.

1. Which number exposes whether growth can be funded next week?
2. An added 1,000 units cost $15 landed each. How much inventory cash is committed?
3. A retailer pays two weeks later than forecast. What is the first modeling action?

Use it in your setting

Replace one fictional example with facts from your field. Name the decision, evidence needed, and the first assumption to verify.

All examples are educational. This printout does not create a verified grade, enrollment, or credential.

Sources and further reading

Original Aim High Hero explanations and fictional exercises. External sources do not endorse this course.

• U.S. Small Business Administration — Calculate startup costs and cash needs