AI Prompts for Working Capital Analysis

Operations controls most of the working capital in a business — inventory directly, and receivables and payables through order accuracy, delivery performance and supplier terms. The cash conversion cycle turns this into a single number, but the useful work is decomposing it: which segments of inventory, which customers, which supplier terms, and what each lever would release in cash against its cost in service or supplier relationship.

These prompts run the diagnostic, rank the levers, and build the plan. They need your balance sheet and operational data; the model will structure the analysis and show the arithmetic, but it should not benchmark against figures it does not have.

Before you use these

Have these ready to replace the highlighted [variables]:

• Inventory, receivables and payables balances (average over the period, not point-in-time)
• Cost of goods sold and revenue for the period
• Inventory by segment, receivables by customer or aging bucket, payables by supplier and terms
• Cost of capital

The prompts

• 1. Diagnose the cash conversion cycle
• 2. Prioritize the operational levers
• 3. Build the working capital improvement plan

1. Diagnose the cash conversion cycle

Act as a working capital analyst diagnosing the cash conversion cycle for [business unit].

Data: [average inventory, receivables, payables for the period; COGS; revenue; period length; prior-period figures for trend]
Breakdowns: [inventory by segment (raw, WIP, finished, by product line); receivables by aging bucket and top customers; payables by supplier and contractual terms vs actual payment]
Cost of capital: [%]

1. Compute DIO (inventory ÷ COGS × days), DSO (receivables ÷ revenue × days), DPO (payables ÷ COGS × days), CCC = DIO + DSO − DPO. Show the formulas and the trend versus prior period.
2. Cash value of one day in each component.
3. Decompose DIO by inventory segment: days and cash per segment, and where the movement came from.
4. Decompose DSO: overdue share, top customers' contribution, and whether the driver is terms, invoicing accuracy, or collection.
5. Decompose DPO: whether we pay early, on terms, or late, by supplier group; and the discount or relationship cost of any early payment.
6. Summary: the three places where the most cash is tied up relative to what the business needs, stated in cash and days.

Show all arithmetic. Do not compare to industry benchmarks unless I provide them.

2. Prioritize the operational levers

You are prioritizing working capital levers for [business unit].

Diagnostic: [DIO/DSO/DPO decomposition and where cash is tied up]
Lever constraints: [service level commitments, customer contract terms, supplier relationship priorities, systems limitations]

Evaluate each lever with cash released (with the calculation), whether it is one-off or sustained, cost or risk (service, supplier, customer, price), time to realize, and owner:
Inventory: safety stock recalibration; E&O disposition; lead-time reduction; MOQ renegotiation; make/buy-to-order for slow items; forecast improvement; consignment or vendor-managed inventory; production batch size reduction.
Receivables: invoicing accuracy and timeliness; terms enforcement; dispute resolution speed; early-payment discounts; credit policy for slow payers; billing milestone changes.
Payables: paying to terms rather than early; term renegotiation in leverage categories; supply chain finance; consolidated payment runs. Include the supplier-relationship and pricing cost of pushing terms.

Then:
1. Rank by cash released net of cost and risk.
2. Separate quick wins (under 90 days) from structural changes.
3. Identify levers that conflict (e.g. safety stock cut vs service target; DPO extension vs supplier pricing) and the rule for resolving them.
4. The total achievable within 12 months with a confidence range.

Be explicit that DPO extension shifts cost to suppliers and may return as price — do not present it as free.

3. Build the working capital improvement plan

Act as a finance and operations lead building a 12-month working capital improvement plan for [business unit].

Prioritized levers: [with cash, timing, owner]
Target: [cash release or CCC days]
Governance: [sponsor, review cadence]

1. Initiatives: for each lever, the specific actions, owner, milestones by quarter, cash release by quarter (one-off vs sustained), and the KPI that shows it is working (e.g. DIO by segment, overdue %, payment-to-terms %).
2. Roll-up: total cash release by quarter against target; show the shortfall if any and the options to close it.
3. Dependencies: initiatives that require system changes, contract renegotiations, or cross-functional decisions, with the decision needed and by when.
4. Risks and controls: service level monitoring for inventory actions; customer feedback for receivables actions; supplier pricing watch for payables actions. Define the trigger that pauses an initiative.
5. Monthly tracking template: KPI, target, actual, variance, one-off vs sustained release, commentary, next actions.
6. Behavioral change: how targets are cascaded and how to avoid quarter-end gaming (e.g. delaying receipts, stretching payments).

Present as a plan table plus a one-page narrative for the sponsor.

Cash conversion cycle, worked

Illustrative figures for a business unit with 120m revenue and 84m COGS, using average balances.

Related prompts

• Inventory Optimization
• Safety Stock Calculation
• ABC and ABC-XYZ Inventory Analysis
• Sales & Operations Planning (S&OP)
• Supplier Negotiation
• Operational Cost Reduction
• Financial model sanity check — Finance

Logical next step

After this, most operations teams move on to Inventory Optimization.

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