The Cheapest Financing Is Already on Your Balance Sheet: Release Working Capital Before Going to the Bank
Before you go to the bank, look at your own balance sheet. The cheapest money you will ever raise is already sitting in it.
Take a business with SAR 60 million of revenue, collecting in 68 days. That is roughly SAR 11 million of cash parked in invoices customers have not paid yet.
Pull 68 days down to 50 and you release about SAR 3 million. Permanently. No interest, no covenants, no dilution.
Borrow that same 3 million at 8% and it costs you 240,000 a year, every year, and you still have to give it back.
The levers are unglamorous, which is exactly why they get skipped.
Invoice the day the work is delivered, not at month-end. On 30-day terms, month-end billing quietly hands the customer an extra 15 days on average.
Bill on milestones, not on completion. If a project runs six months, you should not be financing it for six months.
Enforce the terms you already agreed. Most companies keep working for customers who are 90 days overdue, then wonder where the cash went.
Take deposits on new work. It is normal in most industries and almost nobody asks.
None of this needs a bank, a board approval, or a good quarter. It needs one person owning the number and reporting it weekly.
Working capital is the only funding source where the rate is zero and the only approval you need is your own. — — —
Turning these ideas into a disciplined monthly practice is core to the work of a fractional CFO. To see where your company stands today, start with the instant financial diagnosis, free during our founding period.
Read next
- When Cash Is Tight: The Right Order of Cash Levers Before Cutting Costs
- Why the Most Profitable Month Comes Closest to Missing Payroll: What Growth Does to Cash
- Revenue Is Growing, Profit Is Growing. So Why Is Cash Falling?
- Profitable on Paper, Three Weeks from a Cash Problem: The 13-Week Cash Flow Forecast
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