May 14, 2026
Hi Everyone,
$1.84 trillion – that's how much cash PwC found trapped inside businesses worldwide, stuck between customers who haven't paid and inventory that hasn't sold. Mid-sized companies have gotten 20% slower at collecting over the last decade.
We put together a quick way to check where you stand and close any gaps.
How fast does your cash come back?
Your finance team calls it the "cash conversion cycle." In plain terms, it measures how many days pass between spending a dollar and getting that dollar back from a customer.
It comes down to three things:
- How long do customers take to pay you after you invoice them?
- How long does the inventory sit before it sells (skip this one if you run a software or services business)?
- And how long do you take to pay your own suppliers?
Add the first two, subtract the third, and that's your number.
Lower is better. The Hackett Group's 2025 survey of the top 1,000 US companies found that the median is 37 days. The best performers run under 17.
What good looks like
Your target depends on what you sell.
Software companies, consultants, agencies, and professional services firms don't carry inventory. Your number should be near zero, and the only thing slowing it down is how long it takes clients to pay. Aim for under 30 days.
Product businesses will see a higher number because inventory is part of the equation. 40 to 60 days is solid for most companies at this size. Inventory wait time will be the largest piece, and it's usually where the most room for improvement is.
What is this costing you
If your business does $100 million in annual revenue, every 10 days you speed up your cash cycle, you free roughly $2.7 million. That's money you've already earned but haven't collected yet.
The Hackett Group found an 18-day difference between the median company and the top performers, just on how fast customers pay. Collecting from customers faster is the single biggest win for a mid-market company.
Where to start
Discovery Education, an ed-tech company, cut its average collection period from 97 to 59 days in under a year. They automated payment reminders and sorted accounts by overdue risk, without adding headcount.
Your first move depends on what you sell. Subscription businesses get the biggest win from shifting new customers to annual billing - because a single annual payment replaces 12 monthly collection cycles.
Services firms see the fastest improvement with milestone billing, collecting at project checkpoints rather than waiting until the end.
Product companies should look at inventory first, because that's where the most cash is sitting.
Start with whatever has been in your warehouse for more than 90 days and figure out what it takes to move it.
One thing to avoid, though. Don't speed up your number by paying suppliers late. UK data shows late payments cause roughly 50,000 small business closures a year, and suppliers respond with worse pricing or slower service.
Try this today
We put together a simple calculator you can download here.
Enter three numbers from your finance team: how many days customers take to pay you, how many days inventory sits (if you carry any), and how many days you take to pay your suppliers. The spreadsheet does the rest and shows you how your number compares to companies like yours.
If you want to go further, ask your controller to show you how many customer payments fall into each age group – under 30 days, 31 to 60, 61 to 90, and over 90. The over-90 group is where you'll find the invoices worth chasing first.
Go deeper
👉 PwC: Working Capital Study 25/26 – how much cash is trapped inside companies by region, sector, and size, and where the biggest improvements are happening
👉 The Hackett Group: 2025 U.S. Working Capital Survey – free with registration, covers the full US data including the $600 billion receivables opportunity
👉 McKinsey: A €220 billion opportunity in working capital – a good breakdown of how top-performing companies manage cash differently, with a practical sequencing framework
Coming up tomorrow
Tomorrow, we're sharing a guide to skipping the risk committee and using lighter alternatives until your company actually needs a formal governance structure.
That's it for today!
P.S. Forward this to whoever owns your collections process.