Working capital is an operating decision.
Connect inventory, receivables and payment timing before optimizing each financial metric in isolation.
Follow the cash through operations
Inventory buys service capacity with cash. Customer credit supports sales while delaying collection. Supplier terms influence both payment timing and continuity of supply. A working-capital model should connect these choices rather than treating the cash conversion cycle as a finance-only score.
Stress-test the trade-offs
Compare scenarios such as slower collection, a supplier delay or a demand surge using one set of assumptions. Show the liquidity impact together with delivery risk and operating margin. A policy that frees cash today may create an expensive stockout tomorrow; the model must make that consequence visible.
Agree on ownership and a baseline
Finance, sales and operations should agree on decision rights and the measurement period. Track the cash conversion cycle alongside fulfillment, overdue receivables and supplier exceptions. Separate changes caused by policy from changes caused by growth, seasonality or exchange rates before attributing value.
