Growing Broke. Clients took 39 days to pay in early May and 69 days by October, while the normal firm stayed near 32. If nothing changes it stretches to about 81 days. Tightening collections brings it back to 38 days by February.
Illustrative. Juniper Ridge Advisory is a fictional firm with a full year of modeled data, analyzed the way we analyze yours.
How to calculate it
Track each day: revenue actually collected, plus receivables due today, plus receivables past due, minus write-offs. Track the trend and forecast, and the average days from invoice to payment.
At $10,000 of revenue a day, cutting collection time from 45 days to 30 releases $150,000, once. Collections then return to the revenue rate, which looks like a dip against the month that got the bump.
Profitable on paper, tight in the bank.
Deposits, upfront or annual billing, tighter terms, and steady collections.
Some relational equity with slow-paying clients.
Treating the one-time release as a new run rate and spending it.