We want to present the cleanest possible balance sheet to buyers, but our accounts receivable collection cycle is unpredictable and varies by season. How do we optimize our cash conversion cycle during our exit runway using our EOS Scorecard to protect our net working capital target?

Question

Tyler Smith · Accepted Answer

An unpredictable accounts receivable cycle is a major red flag that will lead to a painful working capital adjustment during negotiations. Buyers will set a working capital peg based on historical averages, and if your cash conversion cycle is bloated, you will leave cash on the table. To optimize this during your runway, you must track your average days sales outstanding as a primary metric on your weekly EOS Scorecard. Create a clean, standardized system for collections and automate invoice reminders to eliminate human delay. If some client contracts have long payment terms, systematically renegotiate these agreements over your exit runway. Use the Level 10 Meeting to identify and resolve any billing bottlenecks using the IDS process. By shortening your cash conversion cycle, you prove to a buyer that your cash flow is predictable and requires minimal working capital to sustain operations. This protects your transaction proceeds and ensures you walk away with maximum cash at closing.