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Profitable on paper, no money in the bank?
The gap between doing the work and being paid for it is measured in days, and every one of those days is your money funding somebody else. Put in five numbers off your balance sheet and this shows you how many days your cash is tied up, and what getting a week back is worth.
Five numbers off your balance sheet
This works out automatically as you type. If nothing changes when you type, the worked explanation further down the page shows how the arithmetic goes.
Money sitting in that cycle right now$200,000
Here is what each of them frees up, one at a time:
Why this is the number that bites
A profitable business can run out of money, and this is usually how. You buy the materials, you pay the subbies, you pay the wages, and then you wait. The longer that wait, the more of your own money is out there funding work you have already done. Growth makes it worse, not better, because a bigger job ties up more cash for longer before any of it comes back.
That is why an overdraft can creep up in a year when the profit and loss looks fine. The profit is real. It is just sitting in somebody else’s bank account, in your stock, or in work you have not invoiced yet.
How the arithmetic works
Four ratios, all of them standard:
- Getting paid. What you are owed, divided by your average day of sales.
- Unbilled work. Work done and not invoiced, divided by your average day of materials and subbies, because it is valued at cost.
- Stock sitting. Stock on hand, divided by your average day of materials and subbies.
- Paying suppliers. What you owe, divided by your average day of materials and subbies. This one is subtracted, because until you pay it, your suppliers are funding you.
Add the first three, take off the fourth, and that is how many days your cash is out the door.
A day off getting paid is worth more than a day off any of the other three, because it is measured against a day of sales while the others are measured against a day of cost. The other three usually come out equal to each other for the same reason. That is the arithmetic being honest, not a fault: what separates them is how hard each one is to actually shift.
What this is not
It is arithmetic on the numbers you typed, not advice, and it is a snapshot. Balance sheet figures on one day may not be typical, and a seasonal business will get a very different answer in March than in September. Stretching what you owe suppliers frees cash but is not free: it can cost you discounts, goodwill and eventually supply. Business Edge Advisors does not warrant that the output is complete, accurate or suitable for any particular purpose. Nothing here is financial or tax advice.
Want to look at your real numbers?
The version we do with clients pulls the actual figures out of Xero across a full year rather than one day, so seasonality shows up, and looks at which of the four you can realistically move. That is the substance of our cashflow work, and it usually starts with a conversation. If you would rather work on the profit side first, the profit lever calculator is the companion to this one.
About this tool. Built by the team at Business Edge Advisors, Registered Tax Agent 20651000. The numbers you type stay in your browser and are not sent anywhere. Last reviewed 5 September 2026.