Introduction: Profitable on Paper, Short of Cash in Reality

A fast-growing building materials distributor had just posted its best year. Revenue was up 35%, and the income statement showed a healthy profit. Yet two weeks before payroll, the CFO walked into the CEO’s office with bad news: there was not enough cash in the bank.

The reasons were simple. Large new customers were paying in 90 days or more. To serve them, the company had built up extra stock. Suppliers still expected payment in 30 days. Every new contract made the business bigger on paper, and tighter on cash in practice.

This is one of the most common traps for growing companies. Growth consumes cash before it produces it. Without strong cash flow management, a business can grow itself into trouble.

The scale of the issue is significant. PwC’s Working Capital Study 25/26, covering more than 17,000 listed companies, estimates that €1.84 trillion of excess working capital could be freed up globally. In the Middle East, PwC has estimated that as much as $50 billion is tied up on the balance sheets of listed companies alone.

The good news is that improving cash flow does not have to mean slowing down. Here is how CEOs and founders can strengthen financial performance and keep growing at the same time.

Step 1: Make Cash Flow Management Visible

Most leadership teams review profit every month. Far fewer review cash with the same discipline. Yet profit is an opinion shaped by accounting rules, while cash is a fact. The first step in better cash flow management is simply seeing it clearly.

Build a rolling 13-week cash forecast

A 13-week cash forecast shows, week by week, the cash you expect to come in and go out over the next quarter. Update it every week, rolling forward by one week each time. It should include:

• Expected customer receipts, based on real payment behaviour, not invoice terms.
• Supplier payments, payroll, rent, tax and loan repayments.
• Planned investments, such as new hires, equipment or stock for new contracts.
• The closing cash balance for each week, compared with a minimum safe level.

This single tool gives early warning of pressure points weeks in advance, when you still have options.

Understand your cash conversion cycle

The cash conversion cycle measures how many days it takes for cash spent on stock and operations to come back from customers. It combines three numbers:

Cash conversion cycle = DSO + DIO − DPO.

In the distributor example, customers took around 90 days to pay, stock sat for 60 days and suppliers were paid in 30. The result was a cycle of about 120 days. Every dirham of new sales needed four months of funding before it came back. Once leaders see this number, the link between growth and cash pressure becomes obvious.

Step 2: Release Cash Trapped in Working Capital

For most growing businesses, the fastest source of cash is not a bank loan. It is the money already tied up in unpaid invoices, excess stock and poorly managed payments. PwC’s study found that days sales outstanding across the companies it analysed rose from 47.3 to 50.0 days between 2015 and 2024, which means customers, on average, are taking longer to pay.

Get paid faster

• Invoice immediately. Send invoices the same day work is delivered, not at month end.
• Agree clear payment terms upfront, and put them in every contract and quote.
• Ask for deposits or milestone payments on large or long projects.
• Make paying easy with clear invoices, online payment options and the correct contact details.
• Follow up early and consistently. A polite reminder a few days before the due date often works better than chasing after it.

Hold less stock without hurting service

• Review slow-moving and obsolete items every quarter and clear them.
• Set stock levels based on actual demand data, not habit or fear of running out.
• Agree shorter lead times or consignment stock with key suppliers.

Manage supplier payments fairly and deliberately

Paying suppliers late damages trust and can raise your costs. The goal is not to delay payments, but to agree terms that match your cash cycle and then stick to them. Many businesses pay some suppliers early by habit while others wait. A consistent payment policy, agreed openly with suppliers, improves both cash flow and relationships.

Small improvements add up. Cutting the distributor’s cash conversion cycle from 120 days to 90 days, for example, would free up a quarter of the cash tied up in the cycle, without losing a single customer.

Step 3: Grow Profitably, Not Just Bigger

Not all growth is good growth. Some customers, products and contracts look attractive on revenue but drain cash and margin. Strong financial performance comes from knowing the difference.

Know which customers and products really make money

Look beyond revenue and gross margin. For your largest customers and product lines, estimate the full cost to serve, including:

• Discounts and rebates.
• Delivery, installation and after-sales support.
• Payment terms and the cash tied up while you wait.
• Account management time and special requests.

Many businesses find that a small group of customers or products generates most of the profit, while others barely break even. That insight shapes where to focus sales effort and where to renegotiate.

Price for value and for cash

Price increases are often the fastest way to improve financial performance, yet many leaders delay them out of fear of losing customers. Review prices at least once a year. Build payment terms into your pricing too. A customer who wants 90-day terms is asking for credit, and that has a cost. Consider offering a small benefit for faster payment, or pricing longer terms accordingly.

Test every growth opportunity for cash, not just profit

Before committing to a big new contract, market or product, ask:

1. How much cash will this need before it pays back?
2. When will it turn cash positive?
3. Can we fund it without putting the rest of the business at risk?

If the answer to the last question is no, look at the right funding before you say yes. Working capital facilities, trade finance and invoice financing are designed to fund growth tied to receivables and stock. They are usually a better fit than stretching operating cash until it breaks.

This is how cash flow management supports cash flow management strategies rather than slowing it: by making sure every new opportunity is one the business can afford to win.

Step 4: Build Financial Discipline Into the Leadership Rhythm

Cash flow is not just the finance team’s job. Sales decides payment terms. Operations decides stock levels. Procurement decides supplier terms. Every leader affects cash, so every leader needs to own part of it.

As Mo Farzadi of PwC Middle East put it: “In the dynamic economic landscape of the Middle East, effective working capital management is crucial.” That is true for companies of every size, not just listed groups.

Put cash on the leadership scorecard

Add a small set of cash measures to your weekly or monthly leadership review, each with a clear owner:

Align incentives with cash, not just revenue

If sales bonuses are paid on invoiced revenue alone, the team has every reason to offer long payment terms and deep discounts. Consider linking part of the bonus to cash collected or gross margin. People focus on what they are rewarded for.

Plan ahead for growth

Use your 13-week forecast and annual budget together. Before each quarter, ask what growth the business is planning and how much cash that growth will need. Agree funding options early, while the business is strong, rather than in a crisis.

When cash becomes part of every leader’s job, financial performance improves steadily, and growth becomes far less stressful.

Conclusion: Cash Is What Lets You Keep Growing

Growth and cash pressure often arrive together. The answer is not to slow down, but to grow with your eyes open. Effective cash flow management gives you the visibility, discipline and options to say yes to the right opportunities without putting the business at risk.

In the next 30 days, you can:

1. Build a rolling 13-week cash forecast and review it every week.
2. Calculate your cash conversion cycle and set a target to reduce it.
3. Tighten invoicing and collections, starting with your largest overdue accounts.
4. Add cash measures, with named owners, to your leadership scorecard.

The key takeaway: strong cash flow management is not about cutting back. It is about freeing the cash already inside your business so it can fund the growth you want, while improving financial performance along the way.

How Straxecutes Can Help

Straxecutes works with founders, CEOs and leadership teams to build businesses that grow profitably and stay in control of their cash. We help you:

• Set up practical cash flow management tools, including rolling forecasts and cash conversion cycle tracking.
• Release cash from working capital by improving billing, collections, stock control and supplier terms.
• Strengthen financial performance through clearer visibility of margin by customer, product and channel.
• Build financial discipline into your leadership rhythm with scorecards, owners and regular reviews.
• Plan and fund growth so new opportunities strengthen the business rather than strain it.

If your business is growing but cash always feels tight, let’s talk. Book a conversation with Straxecutes and find out how much cash your business could free up to fuel its next stage of growth.

Sources

• PwC Working Capital Study 25/26, PwC UK (analysis of more than 17,000 listed companies).
• Effective working capital management is crucial to unlocking shareholder value, says PwC Middle East, PwC Middle East, 19 August 2024.