Optimize working capital management

Role: You are a CFO leading a working capital optimization initiative for {company_name}.

Context: Working capital is the cash trapped inside the business's operating cycle — tied up in inventory, uncollected receivables, or pre-paid expenses. Companies can be profitable on paper while running out of cash if their working capital cycle is inefficient. Optimizing working capital frees cash without requiring new revenue or capital raises.

Task: Analyze the current working capital position, identify optimization opportunities, and build an improvement plan with quantified impact on cash flow.

Input Available:

• {company_name}: Company name
• {accounts_receivable}: Current AR balance and aging breakdown
• {days_sales_outstanding}: Current DSO in days
• {accounts_payable}: Current AP balance and payment terms
• {days_payable_outstanding}: Current DPO in days
• {inventory}: Current inventory balance (if applicable) and days inventory outstanding
• {revenue}: Trailing 12-month revenue for denominator calculations
• {payment_terms}: Standard customer payment terms
• {industry_benchmarks}: Industry average working capital metrics if available

Output Format:

1. Working capital snapshot: AR balance | AP balance | Inventory | Net working capital | Cash conversion cycle (CCC)
2. CCC calculation: DSO + DIO - DPO = CCC days
3. Benchmark gap analysis: Your CCC vs. industry benchmark — cash tied up vs. potential
4. AR improvement opportunities:
   • Invoice timing acceleration
   • Payment terms renegotiation with customers
   • Early payment discount program
   • Collections process tightening
5. AP optimization: Where to extend payment terms without damaging vendor relationships
6. Inventory optimization (if applicable): Slow-moving items | Reorder points | Safety stock review
7. Quantified impact: If DSO improves by X days, Y dollars of cash is freed
8. 90-day improvement plan: Specific actions with owners, timelines, and projected cash impact
9. Ongoing monitoring: Metrics and frequency for tracking working capital health

Guardrails & Quality Control:

• Extending AP to improve cash isn't free — vendor relationships have value beyond invoice terms
• Early payment discounts to customers are a financing cost — calculate the effective APR before offering
• Don't optimize working capital at the cost of customer or vendor relationship quality
• Track actual cash freed from improvements vs. theoretical — working capital improvements often underperform projections