Working capital is a habit, not a number

When ARAN measures a working-capital cycle for the first time, the figure is usually twenty to forty days longer than the owner expected. Nobody in the business is surprised by any individual case. They are surprised by the total.

Where the days accumulate

• Receivables: a good customer asks for an extra fifteen days once, and it becomes the standing arrangement.
• Inventory: a stockout causes pain, so ordering becomes cautious, and caution compounds across every line.
• Payables: a supplier discount is taken for early payment without checking what the cash was worth elsewhere.

Each decision was defensible. The total is not, because nobody was measuring the total.

Make the cycle somebody's number

The correction is unglamorous. Measure receivable, inventory and payable days monthly. Put them on the front page of the management pack. Give each of the three a named owner and a target.

Businesses that do this typically recover fifteen to twenty-five days within two quarters, without a single difficult customer conversation. The days come back from the accommodations nobody remembered making.