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Cash locked in receivables, payables timing, and excess inventory is cash that cannot fund growth. Working Capital Optimization Playbooks analyze the full cash conversion cycle, identify where capital is trapped, and recommend specific actions to free it without disrupting operations or supplier relationships.
The Challenge
The collections team pushes for faster receivables. Procurement negotiates longer payment terms. Supply chain holds safety stock. Each team optimizes independently, but the combined working capital impact is never modeled. Accelerating AR while extending AP sounds logical, but it may strain supplier relationships that affect inventory reliability.
Knowing your DSO is 52 days tells you how you compare to peers, but it does not tell you which specific customers, products, or terms are driving the number. Averages mask the 20% of accounts responsible for 60% of the overdue balance.
Every dollar locked in the working capital cycle is a dollar that must be replaced by borrowing or foregone investment. At current interest rates, $10M in excess working capital costs $500-700K per year in carrying costs, yet most finance teams do not quantify this opportunity cost.
How eyko Solves It
A Working Capital Optimization Playbook connects to your ERP, AR/AP sub-ledgers, and inventory management system. It models the full cash conversion cycle, identifies where capital is trapped at the customer, vendor, and product level, and recommends coordinated actions to release it.
The Playbook analyzed $42M in working capital across the full cash conversion cycle. DSO of 52 days masks a bimodal distribution: 65% of customers pay within 38 days, while 18% of accounts drive DSO to 74 days. Excess inventory of $3.8M is concentrated in 2 product categories with declining velocity. $2.1M in payables are being paid 11 days earlier than terms require.
| Metric | Current | Benchmark | Status |
|---|---|---|---|
| Primary indicator | Flagged | Target | Action needed |
| Secondary indicator | Monitoring | Within range | On track |
| Trend direction | Declining | Stable | Review required |
Working capital optimization quantifies how much cash is currently sitting inside the receivables, payables, and inventory cycle rather than funding the business. The Playbook calculates total trapped capital, ranks levers by recoverable cash and operational feasibility, and breaks the cycle out by customer cohort, vendor tier, and inventory class so finance leaders see exactly where the working capital problem is concentrated.
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FAQ
Everything you need to know about Working Capital Optimization.
Working Capital Optimization is an AI-powered analysis that models the full cash conversion cycle across receivables, payables, and inventory to identify where capital is trapped. It goes beyond aggregate DSO, DPO, and DIO metrics to pinpoint the specific customers, vendors, and product categories driving inefficiency. The output is a coordinated set of actions to release trapped cash without disrupting operations or damaging supplier relationships.
The Working Capital Optimization Playbook connects to your ERP (SAP, Oracle, NetSuite), AR and AP sub-ledgers, inventory management system, and banking data. It combines customer payment histories, vendor payment terms, inventory aging and velocity by SKU, purchase order commitments, and bank balances to build a comprehensive model of the cash conversion cycle at the transaction level.
Standard metrics are portfolio averages that mask underlying distributions. A DSO of 52 days could mean all customers pay at 52 days, or that half pay at 30 and half at 74. This Playbook decomposes each metric to the individual counterparty and product level, identifies the specific drivers of working capital inefficiency, and recommends targeted actions rather than broad policy changes that affect every account equally.
The Playbook recommends collections acceleration only for accounts paying significantly beyond agreed terms. It does not suggest shortening contractual payment terms or applying pressure to customers paying on time. The approach focuses on structured communication at specific milestones (such as day 25 reminders for 30-day terms) that most customers appreciate because it helps them manage their own AP processes more efficiently.
Join the enterprises replacing weeks of manual analysis with a single prompt. See what eyko Playbooks can do with your data.
