Taxes, payroll and business
Cash flow and working capital
Estimate the funds needed to finance receivables and inventory using your payment terms.
Steady-state model · amounts before sales tax · 30-day months
Your business
Cost of goods sold or purchases consumed, excluding payroll. Inventory is valued at cost, not selling price.
Actual average calendar days. Customer terms apply to credit sales; supplier terms apply to credit purchases. Enter 0 inventory days for a business without inventory.
Credit shares and monthly budget
Capital and financing already allocated to this cycle, including funds tied up in existing receivables and inventory. Do not enter only the bank balance after financing the cycle.
Your result
Estimated additional funding
$30,000
- Customer receivables
- $50,000
- Inventory at cost
- $10,000
- Supplier payables · subtract
- $20,000
- Operating requirement
- $40,000
- Target reserve
- $10,000
- Allocated funds · subtract
- $20,000
- Estimated funding headroom
- $0
Operating working capital requirement = receivables + inventory − payables. Additional funding = the greater of 0 and the requirement + reserve − allocated funds. A negative requirement means the cycle releases funds; estimated headroom is not a bank balance.
Monthly profitability · before income tax
- Total expenses
- $40,000
- Operating profit
- $10,000
- Operating margin
- 20 %
| Scenario | Customer days | Requirement | Additional funding |
|---|---|---|---|
| Faster payment | 15 days | $15,000 | $5,000 |
| Your scenario | 30 days | $40,000 | $30,000 |
| Slower payment | 45 days | $65,000 | $55,000 |
Method and sources
Receivables = monthly sales × credit share × customer days ÷ 30. Inventory = monthly cost of sales × inventory days ÷ 30. Payables = monthly cost of sales × credit share × supplier days ÷ 30. Each balance is rounded to cents.
Operating working capital requirement = receivables + inventory − payables. Additional funding = the greater of 0 and the requirement + reserve − allocated funds. A negative requirement means the cycle releases funds; estimated headroom is not a bank balance.
Steady activity without growth or seasonality. Purchases equal cost of sales consumed; only these purchases generate supplier payables. Excludes income and sales taxes, capital investments, loan principal and bad debts. This operating requirement is not accounting working capital (current assets minus current liabilities) or a dated cash forecast.
BDC · Working capital and the operating cycleSteady activity without growth or seasonality. Purchases equal cost of sales consumed; only these purchases generate supplier payables. Excludes income and sales taxes, capital investments, loan principal and bad debts. This operating requirement is not accounting working capital (current assets minus current liabilities) or a dated cash forecast.