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Working Capital Gap Calculator
How much of your money is sitting in stock and unpaid invoices instead of in your bank account?
How to use this
You will need: your sales figures for the last three months, and a rough sense of how long customers take to pay you, how long stock sits before it sells, and how long you take to pay your suppliers. Estimates are fine — this is a direction-finder, not an audit.
- Enter your monthly salesAverage the last three months and leave GST out of it. As you type, the number reformats into lakhs and crores and a gold line appears underneath telling you what you have entered, so you cannot accidentally put in 5 lakh when you meant 50.
- Enter your receivable daysCount from the day you raise the invoice to the day the money actually reaches your bank — not to the day it was due. If most customers settle in about six weeks, enter 45.
- Enter your inventory daysHow long stock sits before it sells. If you want to be exact, divide your average stock value by your daily cost of sales. If you want to be quick, estimate it. A distributor turning stock twice a month would enter about 15.
- Enter your payable daysHow long you genuinely take to pay suppliers, not the credit period written on the purchase order. If your terms say 30 days but you usually pay in 20, enter 20.
- Press CalculateYour result appears below the form. You can then download it as a PDF or an Excel file to keep or to share with your banker.
A note on honesty. The temptation is to enter the days your terms say rather than the days things actually take. Do that and the answer will be comforting and useless. The gap between the two is usually the whole point.
Your numbers
Rough figures are fine. Nothing leaves your browser.
What your results mean
- Cash locked in the business
- The money that belongs to you but is currently sitting in stock on your shelves or in invoices your customers have not paid. It is yours on paper and unavailable in practice. This is the figure that explains why a profitable business can still be short of cash.
- Cash conversion cycle
- Receivable days plus inventory days minus payable days. It is the number of days between paying for something and being paid for it. Under 60 days is comfortable for most trading businesses, over 90 days is a strain. A negative number means your suppliers are funding your trading, which is an enviable position.
- Locked in receivables
- The portion of the gap caused by customers who have not paid. This is usually the easiest part to fix, because it responds to collection discipline rather than to capital.
- Locked in inventory
- The portion caused by stock sitting unsold. Reducing this means buying more carefully rather than more cheaply, which is often a harder conversation.
- Funded by suppliers
- Credit your suppliers extend to you, which offsets the gap. Stretching this further is the fastest lever available, but it is borrowed goodwill and it runs out.
- Why the number matters
- Whatever is locked up has to be funded from somewhere: your own capital, a supplier, or an overdraft charging you interest every day. Knowing the size of the gap tells you how much working capital the business actually needs, which is the single most common thing a growing business gets wrong.
This calculator gives an indicative estimate based only on the figures you enter. It is not professional advice and must not be relied upon for a filing, a loan application or any statutory position. All calculations run inside your browser and are never sent to Krishwealth Trades unless you choose to download a report.
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