Finance.

The framework

1. 01

   Count the three numbers — roughly right beats precisely ignorant.

   Stock days is your average inventory (or unbilled work-in-progress, if you sell services) divided by monthly cost of sales, times 30; receivable days is what customers owe you divided by monthly revenue, times 30; payable days is what you owe suppliers divided by monthly cost of sales, times 30. If the ledger is a mess, count operationally instead: pull the last ten invoices and count the days from issue to payment. Add stock days to receivable days, subtract payable days, and you have the cycle — the number of days each dollar spends locked in the business before it comes back.

2. 02

   Shorten the left side — money owed to you is your money, idle.

   Invoice the day you deliver rather than at month-end, which alone can take a fortnight out of the cycle; take deposits or staged payments where the work runs long; and chase on the first day an invoice is overdue rather than the thirtieth, because the customers who pay slowest are usually the ones who have learned you don't follow up. On the stock side, the discipline is holding less: slow-moving stock is cash you cannot spend, and clearing it at a thin contribution beats admiring it at full price.

3. 03

   Lengthen the right side without burning the supplier.

   Payment terms are part of the price and deserve the same seriousness in negotiation — 60 days instead of 30 is an interest-free loan that renews with every order. Pay on the due date rather than on receipt of the invoice; paying early is generosity your cash flow is quietly funding. But treat supplier trust as the asset it is: the business that pays reliably on day 60 keeps its terms, while the one that pays erratically loses them — and terms extracted from a supplier who cannot bear them have a way of coming back as price rises.

4. 04

   Model growth in cash before you chase it — the cycle scales with you.

   A 60-day cycle means every dollar of daily cost needs two months of funding standing behind it, so doubling sales roughly doubles the cash trapped in the machine — and the money must be found before the growth pays for it. Run the arithmetic before accepting the big contract: a large order on 90-day terms can be the most dangerous thing that ever happens to a small business, because you fund the inputs immediately and wait a quarter for the cash while wages fall due weekly. If the gap exceeds what you hold, the answer is a deposit, a finance line arranged in advance, or a smaller order — not optimism.