Fast growth, tight cash: Why successful CPG brands run out of working capital
This lesson is an essay published by New Hope Network.
Read the essayWhat you'll get
Kristen Palmer, a bank vice president who sells receivables financing, explains with a worked example how a growing brand can run short of cash while sales rise, and how to count the days your cash is tied up from inventory days, customer payment days and supplier payment days. Try the three-number method on your own product, keeping in mind that the column comes from a lender and that store deductions can stretch the wait beyond her example.
Do this week
Fill in your own three numbers (days your inventory sits, days customers take to pay, days suppliers give you) and work out the cash cycle for your best seller.