About This Template
Working capital management is one of the highest-leverage activities in any CFO's toolkit — yet it is consistently underinvested in at growth-stage companies, where focus tends to be on top-line metrics and burn rate rather than the cash locked inside the business. This template gives you a structured framework for measuring your working capital position, calculating the cash conversion cycle, and quantifying the cash release opportunity available from improving your debtor and creditor management.
The cash conversion cycle (CCC) measures how many days of cash are tied up in the operating cycle of the business: cash goes out to pay suppliers, sits in inventory (if applicable), then gets tied up in receivables until customers pay. A CCC of 45 days means on average your cash is locked up for 45 days between outflow and inflow. Reducing that by 10 days — through faster collections, longer payment terms with suppliers, or lower inventory — directly releases cash into the bank account without any requirement to raise more funding.
This template is primarily designed for B2B SaaS, fintech, and services companies that invoice customers, pay suppliers, and want a systematic way to track their Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), and Cash Conversion Cycle. It includes a dashboard for entering key metrics and calculating the CCC, an AR ledger for tracking outstanding customer invoices by ageing bucket, and an AP schedule for managing supplier payment timing.
What's Included
- Instructions sheet — Setup guide and definitions of DSO, DPO, DIO, and CCC with worked examples
- WC Dashboard sheet — Key metric inputs (Revenue, COGS, AR, AP, Inventory), auto-calculated CCC metrics (DSO, DPO, DIO, CCC, Working Capital), target-setting section, and cash release opportunity calculator
- AR Ledger sheet — Customer invoice tracker with ageing buckets (Current, 30, 60, 90+ days), summary totals, and a status column for chase tracking
- AP Schedule sheet — Supplier invoice tracker with days-to-pay, due-date awareness, and priority flags for cash flow planning
How to Use This Template
- Populate the WC Dashboard with your current figures. Enter your annualised Revenue and COGS figures (use trailing 12 months for the most accurate result). Then enter your current Accounts Receivable balance (total outstanding customer invoices), Accounts Payable balance (total outstanding supplier invoices), and Inventory balance (enter zero if your business carries no inventory).
- Review the auto-calculated DSO. DSO (Days Sales Outstanding) = (AR Balance / Annual Revenue) × 365. This tells you on average how many days it takes from issuing an invoice to collecting cash. A DSO above 45 days typically signals a collections process problem or overly generous credit terms. Below 30 days is strong for most B2B businesses.
- Review your DPO. DPO (Days Payable Outstanding) = (AP Balance / Annual COGS) × 365. This tells you on average how long you are taking to pay suppliers. A low DPO means you are paying faster than necessary and potentially leaving cash on the table. A high DPO means you are effectively using supplier credit as short-term financing — which is legitimate but must be managed carefully to preserve supplier relationships.
- Read your Cash Conversion Cycle. CCC = DSO + DIO − DPO. For a services or SaaS business with no inventory, DIO is zero and CCC = DSO − DPO. A positive CCC means you are funding the gap between paying costs and collecting revenue from cash. A negative CCC (common in subscription businesses that collect upfront) means customers are funding your operations — a very cash-efficient position.
- Set targets in the Targets section. Enter a target DSO (e.g. current DSO minus 7 days) and a target DPO (e.g. current DPO plus 5 days). The template will calculate the cash that would be released if you achieved those targets. This quantification is powerful for prioritising collections effort: a 7-day DSO improvement on £500k of AR releases approximately £9.6k of cash — the equivalent of a modest fundraise at zero dilution.
- Populate the AR Ledger with all outstanding invoices. Enter every outstanding customer invoice: customer name, invoice date, invoice number, amount (£), due date, and days outstanding. The Status column should be updated to Current (not yet due), 30 days (1–30 days overdue), 60 days (31–60 days overdue), or 90+ days (over 60 days overdue). The summary rows at the bottom aggregate by ageing bucket.
- Use the AR Ledger as your collections chase list. Sort by Days Outstanding descending. Any invoice in the 60-day or 90+ bucket that does not have an active dispute should be in active chase. Assign ownership to each overdue invoice (finance team, account manager, or escalation to CEO for key accounts) and log the last action in the Notes column.
- Populate the AP Schedule with outstanding supplier invoices. Enter every outstanding payable: supplier name, invoice date, reference, amount, due date, and days to pay. Set the Priority flag to High (must pay on time to preserve relationship or avoid late fees), Medium (can negotiate brief deferral if needed), or Low (discretionary, can be deferred). The summary rows show total payable and amounts due this week, next week, and overdue.
- Use the AP Schedule for cash flow planning. Before each weekly payment run, review the AP Schedule. Pay all High priority items on their due date. For Medium items, consider whether deferring by 3–5 days would help bridge a short-term cash timing issue without damaging the supplier relationship. Never defer Low priority items to the point of becoming overdue — the goal is optimisation, not default.
- Update the dashboard monthly. Refresh the AR balance, AP balance, and Revenue/COGS inputs at each month end. Track the trend in your DSO and CCC over time — improvement here is a genuine operational achievement that deserves to be in the board report.
Frequently Asked Questions
What's a good Cash Conversion Cycle for a fintech or SaaS company?
For a SaaS company that bills monthly in advance (as most do), the CCC should be negative or close to zero — customers prepay, so you have no receivables in the traditional sense, and your AP is funded by deferred revenue. For a B2B fintech or services business that invoices in arrears, a CCC of 20–40 days is respectable. Above 60 days suggests a working capital problem worth investigating. The most important thing is the trend: a CCC that is rising quarter over quarter is a warning signal even if the absolute number looks acceptable.
How do I improve my DSO in practice?
The highest-impact DSO improvement levers are: (1) ensure invoices are sent on the day of delivery or service completion, not days later; (2) move to automated invoice reminders at 7 days, 1 day before due, on the due date, and at 7 days overdue; (3) make payment easy — a payment link on the invoice (Stripe, GoCardless, or equivalent) typically reduces DSO by 4–8 days versus bank transfer only; (4) offer early payment discounts for large customers where the cash value justifies the margin cost; and (5) for high-risk customers, move to upfront or partial upfront payment terms when renewing contracts.
Should I deliberately stretch my payables to improve my CCC?
Extending payables is a legitimate cash management strategy within limits. The limits are: never exceed the agreed payment terms without the supplier's consent; never extend payables to a supplier where the relationship is critical and the supplier has leverage (they can stop supplying); and never stretch payables as a substitute for a proper cash flow forecast — it is a tool for optimisation, not a patch for a structural cash shortage. If you want to extend standard payment terms with a supplier, the professional approach is to negotiate new terms explicitly rather than simply paying later.
What if my business has no inventory — should I skip the DIO row?
Yes. Most technology, fintech, and professional services companies carry no physical inventory. Leave the Inventory input at zero, and the DIO will calculate as zero, which means your CCC = DSO − DPO. Some SaaS businesses have a small amount of inventory in the form of hardware shipped to customers (e.g. payment terminals, IoT devices) — if that applies to you, include the hardware inventory balance in the Inventory input cell and check the DIO calculation. Even a modest hardware inventory can tie up meaningful cash if the business is scaling quickly.
How do I handle invoices that are disputed?
Mark disputed invoices clearly in the Status column of the AR Ledger (e.g. "Disputed — in discussion"). Do not count disputed invoices as collectible in your short-term cash forecast — treat them as a risk item rather than a firm receipt. Disputed invoices should be escalated to the most senior relationship owner as quickly as possible; the longer a dispute sits unresolved, the harder it becomes to collect. Report the total value of disputed invoices separately to the board as part of the working capital update — this is information the board needs to assess the quality of your AR balance.
Can I use this template alongside my accounting software?
Yes — this template is designed to be a working tool that sits alongside Xero, QuickBooks, or your accounting system, not a replacement for it. Export your AR ageing report from your accounting system and paste it into the AR Ledger tab. Export your AP report and paste into the AP Schedule. The dashboard metrics should be drawn from the same source as your management accounts. The template adds the CCC calculation, cash release opportunity sizing, and payment priority framework that most off-the-shelf accounting systems do not provide out of the box.
