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Follow cash through the cycle
Map when the business commits money, delivers work, invoices and receives payment. Use actual transactions to understand delays. Review customer balances, stock records, work in progress and supplier commitments together. An overall balance can hide a small number of old or disputed items that need specific action.
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Separate process issues from commercial choices
An invoice sent late is different from a deliberately agreed customer payment term. Slow stock may reflect a forecasting problem, a service commitment or obsolete items. Identify the reason before choosing a remedy. Avoid assuming that delaying suppliers or reducing stock indiscriminately improves the business; either can harm continuity or relationships.
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Assign actions and review the effect
Choose actions such as resolving disputes, improving billing information or reviewing purchasing assumptions. Give each an owner and a way to measure progress. Check whether the action changes collection, service or supplier outcomes as intended. Update the cash forecast so an operational change is reflected in planning.
Use this in your business
An operating-cycle review
- Before delivery: deposits, procurement and work-in-progress commitments.
- At delivery: evidence needed to invoice accurately and promptly.
- After invoicing: overdue balances, disputes and collection ownership.
- Stock: demand assumptions, ageing and reasons for holding items.
- Suppliers: agreed terms, critical dependencies and upcoming payments.
Illustrative example
What this could look like
A business chases overdue invoices every month, but customers frequently dispute missing purchase-order details. Improving the order-to-invoice handover may address the delay more effectively than increasing reminder frequency. Track whether corrected invoices are paid as expected.
Your next move
Bring the decision into focus.
Pivot Point's cashflow and performance work provides a basis for examining cash tied up in operations. Bring debtor, stock or work-in-progress information and the issue you want to understand.
Start a conversation Meet the advisory teamThis guide is general preparation information. Advice on legal, tax and financial consequences needs to reflect your circumstances.
Further reading: Westpac: working capital