Twice a year, somebody arrives at Blossom Street with a profitable business and an overdraft letter. The P&L says they’re winning; the bank says otherwise. The distance between those two documents is the cash gap — and it has a number.
Measure it in days
Add the days your money is tied up: stock days (how long materials sit before they’re sold) plus debtor days (how long customers take to pay). Subtract creditor days (how long you take to pay suppliers). A fabricator holding 45 days of stock, collecting in 62 and paying in 30 has a cash gap of 77 days — eleven weeks of trading permanently lent, interest-free, to the rest of the supply chain.
Growth makes it worse, not better: every extra £100k of annual sales at a 77-day gap needs roughly £21k of extra cash just to fund the pipeline. That’s why the wall so often arrives in the best year the business has ever had.
The four levers
1. Invoice same-week. The cheapest lever there is. Work finished Friday and invoiced at month-end adds up to three weeks to your gap for free. 2. Deposits and stage payments. Standard in every trade that’s tried it; “our customers won’t wear it” is folklore, not data. 3. Chase on a rhythm. Day 1 statement, day 7 call, day 14 the owner calls. Debtor days fall fast when customers learn the rhythm is real. 4. Re-tender the stockroom. Stock is cash wearing overalls; count it, then halve what doesn’t turn.
The order matters
Close the gap before you chase growth, because the gap prices every pound of growth you win. It’s a standing rule in our Kickstart 90 arc and the first thing Claire’s numbers pack makes visible.
Worked examples use simplified figures. Bring your aged debtors to the Understand Your Numbers workshop and we’ll find your gap on the day.
WRITTEN BY
Claire Boden — Coach — Money & Finance Lead. ICAEW Chartered Accountant (ACA) · ICF Professional Certified Coach (PCC).