Working Capital / base / 1 to 3 months
Customers are taking longer to pay their invoices, so cash the business has already earned is stuck sitting in receivables. AIFO reads how many days of sales are tied up in unpaid invoices and whether that number is drifting upward over time. It watches both the current level and the trend, because either a high level or a steady climb is a problem. The work is done and booked as revenue, but the cash has not arrived.
Revenue that lives in receivables is not the same as money in the bank, and a business can look profitable while slowly starving for cash. Drawing on receivables-turnover data from ReadyRatios and SEC filings, process benchmarks from APQC, and the classic failure-prediction research of Beaver, slow collections are one of the earliest and most reliable warning signs of distress. The longer invoices age, the more the business is effectively financing its own customers.
The pipeline and the profit and loss statement look strong, but the bank balance does not keep pace. A handful of large invoices sit unpaid well past their terms. Chasing payment starts to become a regular part of the week.
Pull an aging report and identify the specific customers and invoices driving the delay rather than treating it as a general trend. Tighten terms, invoice sooner, and follow up the moment an invoice ages past its due date. For your largest accounts, confirm the payment process and the right contact before the next invoice goes out, so cash arrives closer to when the work is done.
Meridian Consulting, an illustrative firm on standard net terms, carries about 520,000 in unpaid invoices against roughly 300,000 of monthly revenue.
Dividing receivables by monthly revenue and scaling to a month shows customers are now taking around 47 days to pay, up from about 34 a few months earlier. The work has all been done and booked as revenue, so the profit and loss statement looks healthy, yet a large sum is sitting in receivables instead of the bank. The trend is climbing, not stabilizing.
Meridian concludes it is quietly financing its customers and needs to fix collections before the cash gap widens further.
Exact thresholds, formulas, and severity bands are omitted from this public view. The full methodology, with every figure, is available in the authenticated app.
Elevated DSO compresses working capital directly. The top client ([redacted] outstanding, [redacted] terms) is the likely primary driver.
The exact thresholds, the formula, and your own figures are in the authenticated app. See it against a real, simulated dataset for Integra Executive Services, our public demo company, or connect your own QuickBooks Online account.