We are heading into due diligence and need to defend our working capital calculations and cash flow projections. How do we use our weekly Scorecard metrics to prove our cash conversion cycle is highly predictable?

Question

Tyler Smith · Accepted Answer

Sophisticated buyers look closely at working capital during due diligence to ensure they will not need to inject massive amounts of cash immediately after closing. To defend your numbers, you must prove that your cash flow is predictable and managed by a consistent system.

Your weekly Scorecard is your best tool to demonstrate this predictability. You should track specific, forward-looking indicators of cash health rather than just looking at historical financial statements. Key metrics to include on your Scorecard are days sales outstanding, weekly collections, and the aging of accounts receivable.

By monitoring these numbers every single week in your Level 10 Meeting™, your leadership team can spot collection delays or cash flow bottlenecks immediately and resolve them before they impact your working capital.

When a buyer reviews your weekly data and sees that your collections consistently meet targets and your accounts receivable are tightly managed, it builds immense confidence. It proves that your cash conversion cycle is not a random occurrence, but the result of a disciplined operating system. This operational predictability directly supports your valuation and prevents buyers from demanding deep discounts during final negotiations.