Working Capital Management: 3 Fixes to Stop Growth from Draining Your Cash
Working capital management is one of the biggest hidden challenges for growing Tech, Media, and Creative businesses.
Hello, and welcome back to our Year-End Reckoning.
If your company, particularly in the Tech, Media, or Creative sectors, is sailing past £1M but struggling to push through the £5M revenue ceiling without panic, I have a sobering truth for you.
Your growth is a liar.
Poor working capital management is the reason revenue growth often creates cash pressure instead of freedom.
It’s the greatest paradox of scaling: You hit a revenue record, you crack open the champagne, but your working capital shrinks to a worrying trickle. You are effectively growing your way straight into a cashflow crisis.
Why? Because you’ve fallen victim to the Scaling Paradox: Every new contract, every new client, costs you cash up front—in supplier payments, staff time, and marketing spend—long before the client pays their invoice.
Revenue is vanity, and profit is a nice idea, but working capital is your business’s oxygen mask. And it needs maintenance now.
Here are the three high-impact, immediate fixes we implement with our clients to transform their working capital discipline before the year is out.
1. The ‘Receivables Rigour’: Stop Being Your Clients’ Banker
Receivables discipline is the first pillar of effective working capital management.
We are often told to be ‘flexible’ and ‘understanding’ with payment terms. That’s nice. But a fractional CFO understands that generosity with payment terms is equivalent to lending your own hard-earned cash interest-free to a client, severely limiting your own growth potential.
Actionable Fix: Implement the 3-Email ‘Dunning Sequence’ (Starting Today)
Stop waiting 7 days past the due date. The moment an invoice goes overdue, an automated, tiered system must kick in. This is about process, not personalities.
- Email 1 (3 Days Overdue): The Friendly Nudge. Tone: “We understand things get busy.”
- Email 2 (7 Days Overdue): The Worry Email. Tone: Firm. “This is now impacting our cashflow forecasting. Please confirm payment by the end of the business day.”
- Email 3 (10–14 Days Overdue): The CFO Hammer. This is the non-negotiable step. Use a clear, formal subject line. Mention the next legal step or, more powerfully, the immediate suspension of all non-essential work until the account is settled.
Sophie’s Hands-On Tip: Do you have a client habitually paying 60+ days late? Your real profitability on that account is dramatically lower than the Gross Margin suggests. Use the year-end clean-up to fire that client. Seriously. A low-profit client that consumes your working capital is actively blocking your path to better, higher-paying work.
2. The ‘Inventory Illusion’: Banish Unbilled Time
In the creative, media, and service-based sectors, ‘inventory’ doesn’t mean pallets of goods. It means your Work in Progress (WIP), particularly your staff’s time.
If staff time is spent on projects that cannot be billed (internal work, pitch work that failed, or stalled client projects), that salary cost sits on your Balance Sheet as a worthless ‘asset’ until you acknowledge the loss.
Unbilled WIP is one of the most damaging blind spots in working capital management for service-based firms.
Actionable Fix: The Service Inventory Write-Down
Every quarter, you must review unbilled WIP and write-down any time you realistically know you cannot invoice.
- Quantify the Loss: Calculate the cost of all staff time dedicated to projects stalled for 90+ days.
- Move It: Shift that value off your Balance Sheet and onto your Income Statement as an expense (Write-Down).
- The Result: This forces a painful, immediate reality check for the CEO/Partners. It is a powerful financial tool that drives urgent decisions: Either sell the service immediately, or admit the mistake and redirect the resource.
This exercise is not just housekeeping; it is profit protection.
3. The ‘Payables Poker’: Pay Smart, Not Just Fast
Many entrepreneurs pay suppliers as soon as the invoice lands, believing it’s simply ‘good practice’. While honouring terms is vital, strategically managing your Payables is critical to your working capital health.
Strategic payables control is a core lever in advanced working capital management.
Actionable Fix: Categorise and Negotiate Payment Terms
You are not trying to avoid payment; you are seeking to align your outflow (Payables) with your inflow (Receivables).
- Category A (Critical): Essential service providers (HMRC, Cloud Hosting, Payroll). Pay on time, every time. Do not risk service interruption.
- Category B (Flexible): Suppliers where a good relationship allows for slightly extended terms (e.g., non-essential creative freelancers, office supplies).
- Strategic Move: Target your Category B suppliers and open a conversation about moving from 30 to 45 or 60-day terms in exchange for a guaranteed volume commitment.
The Strategic Link: Every single day you can extend your Payables term is a day of free, internal financeyou’ve secured. This cash is better spent covering payroll or investing in the specific AI/Tech upgrade that will deliver a measurable ROI next quarter.
Scaling past £5M without cash stress requires intentional working capital management, not just strong sales.
Stop looking backwards and hoping your P&L looks good. Start looking forwards and actively structuring your Balance Sheet for resilience. A year-end reckoning is not an audit; it’s a strategic re-engineering of your financial process.
This year, avoid the scaling trap. If you are serious about pushing past the £5M mark without burning through your cash reserves, you need more than just an accountant—you need a Financial Director who builds systems, not just spreadsheets. WrightCFO specialises in turning those paradoxes into predictable profit, installing the commercial discipline required for sustainable growth in the tech, media, and creative sectors.
This article was originally published here on LinkedIN on December 10th, 2025.
