Free tool
Working capital gap calculator
Find out how many days — and how many dollars — your business spends waiting between paying out and getting paid.
What does this number actually tell you?
The headline figure is the amount of cash your business needs on hand just to keep its current cycle turning. It isn't a loan amount and it isn't a problem by itself — every business that holds stock or offers credit terms has one. It becomes a problem when the cash in the bank is smaller than the gap, or when growth, a slow-paying customer or a tax bill stretches it at the wrong moment.
Three levers set the size of the gap:
- Stock days — how long goods sit before they're sold. Over-ordering and slow lines stretch it.
- Debtor days — how long customers take to pay. Thirty-day terms that drift to sixty double this part of the gap.
- Supplier days — how long you take to pay. This is the part that works in your favour.
How do I work out my own days?
Your accounting software usually reports aged receivables and payables. As a rough guide, debtor days are what customers owe you divided by yearly sales, times 365. Supplier days are what you owe suppliers divided by yearly purchases, times 365. Stock days are the value of stock on hand divided by yearly cost of goods sold, times 365. Your accountant or bookkeeper can sharpen these in a few minutes. Victoria's cash flow forecasting template is a useful companion.
Close the gap or fund it?
Do both. Tightening terms, chasing invoices and trimming slow stock shrink the gap for free. Funding covers what's left so you're not choosing between payroll and a supplier. Match the finance to the shape of the gap:
| Shape of your gap | Capital source that tends to fit |
|---|---|
| Opens and closes through the year | Business line of credit |
| Caused by slow-paying business customers | Invoice finance |
| Growing as the business grows | Working capital loan or growth capital |
| Large, urgent and there's property | Second mortgage or caveat loan |
Then check the timing with the Capital Speed Planner. When you're ready, tell us about the gap — there's no credit check when you first enquire, your details aren't sent around a panel of lenders, and a real person calls you back. The more accurate your answers on the form, the quicker we can line up the right option. See if you qualify.
Frequently asked questions
What is a working capital gap?
It's the cash your business has to fund between paying out — for stock, wages and suppliers — and getting paid by customers. The longer that cycle, the more money is tied up just keeping the business running.
How is the gap calculated here?
We add the days stock sits on the shelf to the days customers take to pay, subtract the days you take to pay suppliers, and multiply that cash conversion cycle by your average daily cost base. It's a planning estimate, not an accounting figure.
Why does growth make the gap bigger?
When sales grow, you buy more stock and pay more wages before the extra revenue arrives. The cycle stays the same length, but each day of it costs more — so growing businesses often feel short of cash even while profitable.
What's a good cash conversion cycle?
Shorter is better, and negative is best — it means customers pay you before you pay suppliers. What's realistic depends heavily on your industry; compare against your own history first.
Which finance suits a working capital gap?
A business line of credit suits a gap that opens and closes. Invoice finance suits a gap caused by slow-paying business customers. A term loan or property-secured facility suits a larger, longer-lasting gap, such as one created by growth.
Know your gap? Let's fund it properly.
One short enquiry, no credit check when you first enquire, and a real person who calls you back with options that fit.
No credit check to enquire
No spray-and-pray
A real person on it