Slow Inventory
Excess or slow-moving stock may be locking funds that could otherwise support routine operations.
ECONOMIC TOOL // LIQUIDITY MANAGEMENT
Working Capital Health Check
Measure your business liquidity, operating cycle, inventory efficiency, receivables, and short-term financial strength before taking on additional debt.
Run Capital Health Check ↓Evaluate Operational Liquidity
Overall Capital Health Score
Good
0 / 100
Liquidity
0%
Cash Flow
0%
Inventory
0%
Receivables
0%
Debt Exposure
0%
Cash Position
Healthy
Inventory Efficiency
Needs Improvement
Receivable Collection
Slow
Debt Exposure
Moderate
Working Capital Outlook
Stable
Alternative To Borrowing Insight
₦0 Potential Cash Release
Where Cash May Be Trapped
Delayed Customer Payments
Extended receivable timelines are restricting available cash reserves.
Supplier Timing
Payment timing can be renegotiated to improve liquidity flexibility.
Operating Expenses
Fixed overhead is consuming cash faster than collection cycles complete.
Improve Your Working Capital
1. Improve Collections
Enforce strict payment terms, offer prompt-payment discounts, and reduce customer debtor delays.
2. Reduce Idle Inventory
Clear out slow-moving stock and increase inventory turnover to unlock tied-up operational capital.
3. Negotiate Supplier Terms
Align credit terms with suppliers so payouts occur after customer receivables clear.
4. Review Pricing & Margins
Adjust selling prices to absorb current inflation pressures and preserve net operating margin.
Still Considering A Loan?
Evaluate the actual annual cost, interest impact, and monthly debt service burden before taking on new bank debt.
Business Still Under Pressure?
Request a comprehensive RevFix revenue assessment to pinpoint operational leaks, pricing issues, and margin drains.
When To Use This Health Check
Before Applying for a Loan
Verify if internal cash can be released from inventory or receivables before adding interest liabilities.
Before Expanding
Ensure your working capital cycle can support higher order volumes without triggering liquidity shortfalls.
When Cash Feels Tight
Identify whether cash tightness is caused by true unprofitability or simply trapped operational working capital.
During Rapid Growth
Prevent "growth insolvency" where rapid revenue growth outpaces your cash collection timeline.
Frequently Asked Questions
What is working capital?
Working capital is the difference between a business's short-term assets (cash, receivables, stock) and short-term liabilities (supplier debts, immediate bills). It represents the cash available to fund daily operations.
Why can profitable businesses run out of cash?
A business can show net profit on paper but run out of cash if profit is locked up in unpaid customer invoices or unsold inventory while immediate bills must be paid in cash.
Can inventory reduce liquidity?
Yes. Excessive or slow-moving stock ties up cash that could otherwise cover operating expenses or emergency opportunities, converting cash into illiquid assets.
Does this tool replace professional financial advice?
No. This tool provides operational decision support and directional metrics. Formal capital restructuring should be conducted with qualified corporate advisors.
How often should I check working capital?
We recommend monitoring operational working capital metrics monthly, or immediately prior to committing capital to major inventory purchases or debt financing.
Is borrowing always the best solution for cash shortages?
Not always. If cash shortages stem from delayed customer payments or excess stock, taking a loan adds interest expense to an operational timing problem rather than solving it.
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