# Working Capital Optimizer

> Computes the cash conversion cycle from DSO, DIO, and DPO via a bundled calculator, then ranks specific cash-release levers by actual dollar impact, turning "improve working capital" into a prioritized, sized list of concrete actions. Use whenever the user wants to free up cash trapped in the balance sheet, needs to compute or improve the cash conversion cycle, or has a working capital initiative with no ranked, dollar-sized list of what to actually do.

- Skill: `natan-mohart/working-capital-optimizer` (Agent Skill, multi-file: 2 files)
- Install (CLI): `npx skillmds@latest add natan-mohart/working-capital-optimizer`
- Raw SKILL.md: https://api.skillmd.com/api/skills/natan-mohart/working-capital-optimizer/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: Natan-Mohart (https://skillmd.com/u/natan-mohart)
- Updated: 2026-09-21
- Page: https://skillmd.com/skills/natan-mohart/working-capital-optimizer

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# Working Capital Optimizer

## When to use
Use whenever cash is tied up in receivables, inventory, or payables and needs to be freed, or when the cash conversion cycle needs computing for a board update or lender conversation. Especially use to replace a working capital initiative that names the problem ("we have too much cash trapped in the balance sheet") without a ranked, sized list of specific actions to fix it.

## What it does
Computes DSO, DIO, and DPO from the balance sheet and income statement via a bundled calculator, derives the cash conversion cycle, and ranks a set of candidate levers (specific actions on receivables, inventory, or payables) by the actual dollar amount of cash each would release — so the output is a prioritized action list, not just a diagnostic number.

## Method
1. **Compute DSO, DIO, and DPO from actual balance sheet and income statement figures** — accounts receivable against revenue, inventory against COGS, accounts payable against COGS — using the standard formulas, not estimates.
2. **Run the bundled calculator** (`scripts/working_capital.py`) to get the cash conversion cycle (DSO + DIO minus DPO) and, if levers are provided, the ranked cash-release impact of each.
3. **Name specific, executable levers**, not generic goals: "reduce DSO by 10 days via faster invoicing," not "improve collections." Each lever needs a stated days-impact and which of the three components it affects.
4. **Read the ranked output by dollar impact, not by days impact alone.** A 15-day improvement in DPO and a 10-day improvement in DSO release different dollar amounts depending on revenue and COGS scale — the ranking should reflect actual cash released, which the calculator computes directly.
5. **Check DPO-extending levers against supplier relationship risk** separately from the pure cash math — extending payment terms releases cash but can damage a relationship or pricing if pushed too far or done without negotiation.
6. **Sequence the levers by ease of execution alongside impact** — a lever with slightly less cash impact but immediate executability may be worth doing first, building momentum before tackling a harder one.
7. **Recompute the cash conversion cycle after executing levers**, not just projecting it — confirm the actual DSO, DIO, and DPO moved as expected, since the plan and the result don't always match without follow-through.

## Inputs
- Annual revenue and COGS
- Current accounts receivable, inventory, and accounts payable balances
- Candidate levers with a specific days-impact and which component (DSO, DIO, or DPO) each affects
- Config saved as JSON matching the format documented at the top of `scripts/working_capital.py`

## Output format
DSO, DIO, DPO, and the resulting cash conversion cycle; ranked lever list by dollar cash released, with the days impact and which component each affects; total cash release potential if all levers execute; the resulting cash conversion cycle after all levers.

## Example
A business with an 82.8-day cash conversion cycle sets three levers: faster invoicing (10 days off DSO), supplier renegotiation (15 days added to DPO), and reduced safety stock (8 days off DIO). The calculator shows faster invoicing releases the most cash ($493K) despite having the smallest days-impact number, because it's applied against the much larger revenue base rather than COGS, a ranking that wouldn't be obvious from the days-impact numbers alone.

## Common pitfalls
- Ranking levers by days impact instead of actual dollar cash released, which can favor the wrong lever when revenue and COGS scale differently.
- Setting DPO-extension targets without considering supplier relationship risk, treating it as a pure math exercise.
- Naming a working capital goal without specific, executable levers behind it, leaving the initiative with nothing concrete to act on.