Our cash flow is healthy overall, but our accounts receivable collection fluctuates wildly based on seasonal demand, which will complicate our net working capital peg during a sale. How do we stabilize our working capital cycle on our runway so we do not leave excess cash on the table at closing?

Question

Tyler Smith · Accepted Answer

When a buyer prepares to close a transaction, they will look at your net working capital over the trailing twelve months to establish a working capital peg. If your accounts receivable collections fluctuate wildly due to seasonality, you risk a major cash adjustment at closing that could cost you hundreds of thousands of dollars.

To protect your proceeds, you must use your runway to stabilize your working capital cycle. Start by looking at your weekly Scorecard. If you are not already tracking Days Sales Outstanding, make it a permanent measurable. Your finance seat on the Accountability Chart must own this number and be held accountable for keeping it consistent.

Create a quarterly Rock focused on standardizing your invoicing terms. Transition seasonal clients to automatic electronic payments, structured monthly payment plans, or upfront deposits. Eliminate custom billing arrangements that allow clients to delay payment.

By tightening your collections and standardizing billing, you build a predictable cash flow cycle that shows up as a clean, consistent line on your balance sheet. When the buyer performs financial due diligence, they will see a stable, institutional-grade cash cycle rather than a volatile roller coaster. This consistency ensures you agree on a fair working capital peg and keep your cash at close.