Working Capital Gap Calculator
Model your cash conversion cycle from receivables, inventory and payables — and size the working-capital facility your business actually needs.
Illustrative planning only. Default inputs are example assumptions, not market rates, fees, coverage or tenors from any lender or country source. Results are not credit approval, pre-approval, a financing offer, underwriting, a recommendation or a commitment. Excludes fees, taxes, insurance premiums, FX and lender-specific terms. The formula and assumptions are explained below the tool.
Interpretation
CCC = DSO + DIO − DPO. The higher your CCC, the more cash is trapped between paying suppliers and being paid by customers.
Sized facility is your average working-capital gap plus a buffer for seasonality, growth and peak-week volatility. Committed revolvers are typically sized around this peak, not the average.
Structural alternatives — supply chain finance, receivables discounting, inventory financing — can compress each component individually. See the Working Capital pillar.
How large is the working-capital gap?
The cash conversion cycle (CCC) in days equals DSO plus DIO minus DPO. The tool converts each into an average balance: receivables = revenue × DSO ÷ 365, inventory = cost of goods sold × DIO ÷ 365, payables = cost of goods sold × DPO ÷ 365. The net gap is receivables plus inventory minus payables, and the sized facility adds your safety buffer percentage.
Who is it for, and when should you use it?
Who: Operators commissioning a new line or expanding output, and finance teams planning a working-capital facility alongside equipment CAPEX.
When: When a new project will add sales and inventory before customer payments arrive, typically during ramp-up after commissioning.
Worked example (illustrative values)
Illustrative inputs (the tool's defaults): annual revenue USD 100,000,000; COGS 72% of revenue; DSO 65 days; DIO 58 days; DPO 38 days; buffer 15%.
| Cash conversion cycle (65 + 58 − 38) | 85 days |
|---|---|
| Average receivables | USD 17,808,219 |
| Average inventory | USD 11,441,096 |
| Average payables | USD 7,495,890 |
| Net working-capital gap | USD 21,753,425 |
| Sized requirement incl. 15% buffer | USD 25,016,438 |
Hypothetical figures for explanation only; they are not industry benchmarks.
What are the assumptions and limitations?
- Uses a 365-day year and average balances; seasonal peaks can require more than the average.
- Ramp-up periods, prepayments to equipment suppliers and VAT timing are not included.
- The cycle-length verdicts are screening conventions, not lender criteria.
Frequently asked questions
What are DSO, DIO and DPO?
Days sales outstanding (how long customers take to pay), days inventory outstanding (how long stock is held) and days payables outstanding (how long you take to pay suppliers).
Why is inventory based on cost of goods sold rather than revenue?
Inventory and payables are carried at cost, so they are scaled from cost of goods sold; receivables are owed at the selling price, so they are scaled from revenue.
How can the gap be reduced?
Shorter customer payment terms, lower stock holding or longer supplier terms all shorten the cycle. Each has commercial trade-offs to agree with customers and suppliers.
What should you do next?
Global B2B Group does not rank lenders. All figures shown are indicative and subject to lender approval and project-specific due diligence.
