Critical numbers – Your stock turn

Critical numbers – Your stock turn

If you sell stock or inventory, it’s essential you understand stock turn and how to increase it. Slow-moving, obsolete, or ‘dead’ stock will seriously reduce both your cashflow and your ability to increase your profit. The longer stock takes to sell, the longer you...
Critical numbers – Your lock up days

Critical numbers – Your lock up days

Your lock up days is the number of days it takes to convert your debtors, stock and work in progress into cash. The higher your lock up days, the more cash is needed in the business (either from you or the bank), and the higher the risk of losing that cash. Worse,...
Critical numbers – The working capital cycle

Critical numbers – The working capital cycle

Profitable businesses can go broke simply because they don’t manage their working capital cycle and run out of cash. Your working capital cycle is the number of days your cash is tied up to take your goods and services through the sales process. The longer the...
Critical numbers – Debtor days

Critical numbers – Debtor days

How long is it taking you to get paid? How do you measure this? What strategies can you adopt to get paid faster? Debtor days is used to measure, on average, how long your customers take to pay you. While there are many complex formulas to accurately calculate this, a...
Critical numbers – What is working capital?

Critical numbers – What is working capital?

If cashflow is the lifeblood of your business, then working capital is the health check you should have regularly to keep your business alive. Working capital measures the surplus (or deficit) you have to keep your business afloat without needing to sell assets,...