As we prepare the business for a future exit, we want our weekly Scorecard to show potential buyers that we have a highly predictable cash conversion cycle. What weekly leading indicators should we track to prove our working capital efficiency?

Question

Tyler Smith · Accepted Answer

To prepare your business for a clean exit, you must show potential buyers that your cash conversion cycle is highly efficient and predictable. Buyers look closely at working capital because a slow cash cycle acts as a drag on enterprise value. To prove your operational efficiency, your weekly Scorecard should track a few key leading indicators that manage this risk. First, track your work in progress billing turnaround time. This measures the number of days between completing a phase of work and sending the invoice. The shorter this gap, the faster cash returns to your business. Second, track weekly accounts receivable collections and the percentage of invoices that are past thirty days. This gives a buyer confidence that you have a disciplined collection system. Third, track your client onboarding timeline, measuring how quickly a new client moves from contract signature to first billable milestone. If this onboarding process drags, it locks up capital and delays your revenue recognition. By keeping these operational metrics consistently green on your weekly Scorecard, you demonstrate to a buyer that your business does not require massive infusions of working capital to sustain its growth, directly increasing your valuation.