A mid-market distributor was growing revenue every quarter and still finding itself scrambling to cover payroll and supplier terms. The problem was never demand — it was that cash took too long to move from invoice to bank account, and leadership had no forward view of what was coming due until it was already a crisis. Nova Capital Consulting was engaged to rebuild the company’s cash infrastructure from the ground up: how receivables were priced and collected, how working capital was deployed, and how leadership planned thirteen weeks ahead instead of reacting to a bank balance.
The engagement moved the business from reactive firefighting to disciplined liquidity management. Within two quarters, days sales outstanding dropped 42%, $6.2M in working capital was released back into the business, and the company added 29 days of cash buffer — turning what had been a recurring liquidity scare into a durable financial cushion.
The company’s income statement looked healthy — revenue was climbing, margins were stable, and the sales pipeline was full. But the balance sheet told a different story. Receivables were aging past 75 days on average, the revolving credit line was drawn down to cover routine payroll, and finance leadership was making decisions off a static bank balance rather than any forward view of cash. Growth was consuming liquidity faster than operations could replenish it.
Diagnostic work showed the root cause was structural, not cyclical: invoicing was inconsistent across business units, credit terms were extended without a formal policy, and collections follow-up happened only when a customer was already severely past due. This pattern mirrors what national data shows across the small and mid-market segment — the Federal Reserve’s 2025 Small Business Credit Survey found that 51% of firms cite uneven cash flows as a core financial challenge, and 56% say difficulty meeting operating expenses is a primary reason they seek outside financing in the first place.
Every day an invoice sits uncollected is a day of working capital funding someone else's balance sheet, not yours.
Financial Restructuring
Leadership had quarterly financial statements and a daily bank balance, but nothing in between. There was no rolling forecast that connected receivables timing, payables obligations, and revolving credit usage into a single forward-looking view. Cash decisions — hiring, inventory purchases, capital equipment — were being made reactively, often days before a shortfall rather than weeks ahead of one.
Diagnostic modeling isolated three specific leaks: receivables aging well past standard terms, inventory carried at levels disconnected from actual turn rates, and payables managed without any strategic view of timing or vendor terms. Each was treated as a separate operational issue by the business; none had ever been assessed together as a single working capital system.
Key improvements included:
None of these issues were visible in a single financial statement — each looked like a minor operational inefficiency in isolation. Together, they were quietly draining millions in working capital and keeping the business permanently one bad month away from a liquidity crisis.
The mandate for Nova Capital Consulting was not simply to collect faster — it was to rebuild the company’s entire cash flow operating model so that liquidity became a managed, forecasted asset rather than a monthly surprise.
Nova Capital Consulting’s approach combined three workstreams running in parallel: a disciplined receivables restructuring, a working capital release program across inventory and payables, and a rolling forecast infrastructure that gave leadership forward visibility for the first time.
The team implemented a 13-week rolling cash flow forecast tied directly to AR aging, payables schedules, and revolving credit utilization, refreshed weekly rather than reviewed quarterly. This is the same discipline used across turnaround and restructuring engagements — as Alvarez & Marsal’s guidance on the 13-week cash flow model notes, the tool highlights working capital pressures early and supports faster decision-making long before a shortfall becomes a crisis, whether the business is distressed or simply growing faster than its cash infrastructure can support.
Credit terms were standardized by customer risk tier, invoicing was moved to a consistent same-day cycle instead of batch billing at month-end, and a graduated collections escalation process replaced ad hoc follow-up. Automated payment reminders were introduced at 15, 30, and 45 days outstanding — well before accounts reached the severely delinquent stage that had previously triggered the only collections activity.
In parallel, the team rationalized inventory levels against actual turn data by SKU category, freeing cash tied up in slow-moving stock, and renegotiated payment timing with key vendors to align outflows with the new receivables cadence — without damaging supplier relationships or triggering early-payment penalties.
The forecast isn't a reporting exercise — it's the mechanism that turns cash management from reactive to strategic.
Working Capital Optimization
A weekly cash management cadence was established with finance leadership, reviewing forecast accuracy, aging trends, and working capital metrics against defined targets. This governance layer ensured the new process survived beyond the engagement itself, embedding the discipline into how the finance team operated going forward.
Within two quarters of implementation, the combined impact of faster collections, disciplined working capital management, and forward cash visibility fundamentally changed the company’s liquidity position.
Days sales outstanding fell 42%, moving the company from well above sector norms to a position competitive with industry benchmarks. For context, CreditPulse’s DSO benchmark data shows that a low DSO means faster cash conversion, while a high DSO effectively means capital is stuck in unpaid invoices instead of the bank — the company’s collections restructuring moved it decisively into the former category.
Faster collections combined with rationalized inventory and renegotiated payables terms released $6.2M in working capital — capital that had previously been trapped in the operating cycle and was redeployed toward growth investment instead of covering routine cash gaps through the revolving line.
The company added 29 days of cash buffer, giving leadership a genuine margin of safety against demand volatility, supplier disruption, or a slow-paying customer — a cushion that simply didn’t exist under the prior reactive model. The 13-week forecasting infrastructure and collections discipline built during the engagement are now standing capabilities, reused every planning cycle rather than a one-time fix.
The result wasn’t a single quarter of improved numbers — it was a permanent shift in how the finance function operates. Weekly cash governance, standardized credit policy, and rolling forecasting are now embedded processes, not a one-time project outcome.
Liquidity discipline is increasingly treated as a competitive advantage rather than a back-office function, particularly as businesses navigate persistent cost pressure and tighter financing conditions. As the JPMorgan Chase Institute’s research on small business cash buffers underscores, most businesses operate with only a matter of weeks of cash reserve — which is exactly why building forecasting infrastructure and collections discipline now, rather than after the next shortfall, is what separates companies that absorb a shock from those that get derailed by one.
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