This chapter answers a question that comes up the moment you try to fix a working capital figure directly: why won't Trade Creditors or Trade Debtors hold the number I just typed in? The answer is that these two balances are not free-standing inputs in BusinessSolvency — they are derived figures, calculated automatically from your trading terms. Understanding this mechanism is essential to using the forecast correctly.
11.1 The Core Mechanism
Trade Creditors and Trade Debtors are not stored as raw balances you can overwrite. Every time the forecast is calculated, they are rebuilt from two simple day-count formulas:
Trade Creditors = Purchases from suppliers × (Creditor Days ÷ 365) Trade Debtors = Revenue × (Debtor Days ÷ 365) Inventory = COGS × (Stock Days ÷ 365) (when Stock Days are set; see 11.9)Purchases from suppliers are what your business buys on credit: cost of goods (fuel included), less any wages moved into it, plus rent, other overheads, insurance and professional fees. Wages, super, depreciation, interest, tax and the contingency are not bought from suppliers, so they are left out. Until 31 October 2026 Creditor Days were measured against cost of goods alone; the demonstration businesses’ forecast Creditor Days were then reset to the whole days that give about the same amounts owed.
This is why a direct database edit to Trade Creditors or Trade Debtors gets silently overwritten the next time the app recalculates — the stored value is never the authority. Creditor Days and Debtor Days are the real inputs; the balance sheet figures are just the output.
11.2 Why This Design Makes Sense
It would be simpler to let business owners type Trade Creditors and Trade Debtors in directly — but that would let the balance sheet drift out of sync with trading reality. Tying both figures to a Days input keeps three things honest at once:
| What it enforces | Why it matters |
|---|---|
| Consistency | Creditors always reflect the year’s actual purchases from suppliers, not a stale or manually-typed figure left over from a prior scenario. |
| Comparability | Because Days figures are a ratio, you can compare payment/collection behaviour across years of very different revenue scale — a $2.2M debtor balance means nothing on its own, but 55 days does. |
| Governance signal | Days figures are the language business owners and auditors actually use to assess collections and payment discipline — not raw dollar balances. |
11.3 Worked Case Study — Bayside's Debtor Crisis
This case study is drawn from Bayside Home & Living, one of the demonstration businesses built and verified inside the platform — a genuine confirmed result, not a projection.
Trade Debtors reached $2,211,917 against $14,679,091 revenue — a blended Debtor Days figure of roughly 55 days. For a retail business with an estimated 50% credit-account customer base on standard 30-day terms, the blended figure should sit closer to 15–20 days — and Bayside's own FY2025–2026 debtor days had held steady around 30 the whole time. A gap this size points to credit customers stretching to 90–100+ days without consequence — consistent with no formal debtor contract or follow-up policy in place. DSCR stayed critical at 0.74x and cash stayed overdrawn at −$360,061 — but a simultaneous $550,000 stock drawdown, and $450,000 of new borrowing, partly offset the receivables damage, keeping Net Operating Cash Flow positive at $268,859. The underlying governance failure was exactly as severe as it looks; only the net cash outcome benefited from an unrelated stock movement and borrowed money in the same year.
Correcting the Debtor and Creditor Days settings fixes the working-capital mechanism directly — but it doesn't insulate a business from whatever arrives next. In Bayside's case, FY2028 brings a genuine, unrelated capital-expansion decision (see Chapter 8B): a $6 million expansion funded mostly by $4 million of new borrowing, which keeps cash overdrawn at −$353,059 even as DSCR reads a comfortable 6.23x — the same "no single ratio is the whole picture" lesson from FY2027, now from the opposite direction. Collections do recover: debtors fall to $1,707,399 in FY2028 (about 35 days) and $1,058,588 in FY2029 (about 20 days). The overdraft is cleared in FY2029 (cash $552,920; DSCR 3.53x), backed by $250,000 of new shares, and by FY2030 cash is $722,675, DSCR 1.68x, with a fully-funded $1,389,425 Contingency Reserve behind the business — built from equity and the company's own trading cash, not from any further Days adjustment.
11.4 How This Connects to Purchases
Purchases from suppliers drive the creditor formula (11.1). They are what your business has bought on credit in the period — stock, materials, fuel, rent, overheads, insurance and professional fees — not what it has necessarily paid for yet. Creditor Days is the gap between buying and paying. This matters beyond the income statement: a change to any of those costs changes the base that Creditor Days multiplies against, which changes the derived Trade Creditors figure — even with no change to Creditor Days itself.
11.5 Reading Days Figures Like a Business Owner
| Days Figure | What "normal" looks like | What a spike usually means |
|---|---|---|
| Debtor Days | Pure retail: 0–15 days. Mixed retail/trade credit: 15–30 days. B2B trade credit: 30–75 days. | No formal terms, no follow-up discipline, or genuine customer cash stress flowing through to you. |
| Creditor Days | Your business’s own supplier terms, set in Edit Details (3.10). More than 10 days past them asks for action. | Can look like nothing changed — costs quietly absorbed by stretching supplier payment, masking a real cash problem temporarily. Eventually suppliers demand cash terms or cut credit. |
11.6 Action Checklist — When a Working Capital Balance Looks Wrong
- Don't edit the dollar balance. Trade Creditors and Trade Debtors are calculated, not stored as authoritative inputs — a direct edit will be overwritten on the next recalculation.
- Convert the dollar figure to a Days number first. Divide Trade Debtors by revenue, Trade Creditors by purchases from suppliers, or stock by cost of goods, and multiply by 365. This tells you what you're actually looking at.
- Judge the Days figure against the business's real credit terms (the terms set in Edit Details, 3.10) — not a generic benchmark. A wholesale business and a pure walk-in retailer have very different "normal" ranges.
- Adjust Creditor Days or Debtor Days, not the balance sheet field. Let the formula recalculate the dollar figure for you.
- Re-check both Days figures together after any change, since they move Net Operating Cash Flow in opposite directions and can mask each other's effect on the Solvency Report.
11.7 Rolling Forward to the Next Year
The Roll Forward button on the Forecast page carries a full year's figures into another year in one step — every Income Statement, Balance Sheet, and Cash Flow field, not just a handful. Choose the source year on the left (this can be your last historical year, or an existing forecast year) and the target year on the right, then confirm. It replaces the separate "Copy Current Year," "Seed from Historical," and "Set Breakeven & Copy" tools that used to exist as three different buttons doing three overlapping jobs — there is now one mechanism, and it works the same way regardless of what kind of year you're rolling from.
Roll Forward is deliberately unconnected to Breakeven. Setting up next year's starting figures and checking whether that year clears Breakeven are two separate questions — roll the year forward first, review and adjust what's genuinely different, then use View at Breakeven separately once the figures are real.
11.8 Provisions — Accrued vs Funded
PAYG Withholding, Superannuation, and Tax Provisions (see Chapter 4, Section 4.4) appear in two separate places, and they answer two separate questions. The Balance Sheet balance answers "how much do we currently owe?" — it can be entered the year the obligation is recognised, independently of whether cash has actually been set aside for it yet. The matching Cash Flow "Provision Funding" line answers a different question: "how much cash did we actually commit this year to cover it?" These two figures are not linked automatically — entering one does not populate the other.
This gives you room for a genuine, deliberate business decision: a business under cash pressure can recognise an obligation (the Balance Sheet provision) in the year it arises, while leaving that year's Funding line at $0 — an honest record that the obligation exists but hasn't yet been backed by real cash. Once cash allows, a later year's Funding line can be set to match the provision, recording the point the obligation actually got funded. Both years are correct; they're just telling different parts of the same story.
11.9 The Cash Conversion Cycle — the Days Your Business Funds Its Own Trading
Every dollar your business spends goes on a round trip. It buys stock; the stock waits on the shelf; it is sold, often on credit; and the dollar comes home when the customer pays. Suppliers help by letting you pay them later. The days between paying your suppliers (cash out) and your customers paying you (cash in) are days your business carries its own trading, out of its own working capital. That number of days is the cash conversion cycle, and it is one of the most useful numbers an owner can know.
Stock days = Inventory ÷ Total COGS × 365 Customer days = Trade Debtors ÷ Revenue × 365 Supplier days = Trade Creditors ÷ purchases from suppliers × 365 Cash conversion cycle = stock days + customer days − supplier days Operating cycle = stock days + customer daysThe operating cycle is the whole round trip, from buying the stock to the customer paying. The cash conversion cycle is the part of it your business pays for itself, after the suppliers’ credit.
| The round trip | Days |
|---|---|
| Stock waits on the shelf | 20 days |
| Customers take to pay | 30 days |
| Suppliers wait to be paid | 30 days |
| Operating cycle | 20 + 30 = 50 days |
| Cash conversion cycle | 20 + 30 − 30 = 20 days that your business carries itself |
Debtor Days and Creditor Days have a partner: Stock Days, in the same Working Capital Terms row on the Forecast page. Type the days and BusinessSolvency works out Inventory / Stock for you:
Inventory = Total COGS × (Stock Days ÷ 365)Leave Stock Days at 0 to type the Inventory figure yourself, or tick Manual beside it. Every business carries some stock: goods for sale, food and drink behind a club bar, materials, spare parts, equipment and maintenance supplies. The same rule as 11.1 applies: to change the stock figure, change the days, not the balance.
| Business and year | Stock days | Customer days | Supplier days | Cash conversion cycle |
|---|---|---|---|---|
| Hero Coffee Van, FY2027 | 16 | 6 | 24 | −2 days (2 in your favour) |
| Bayside, FY2025 | 103 | 30 | 56 | 77 days |
| Bayside, FY2027 | 70 | 55 | 52 | 73 days |
| Coastline, FY2025 | 43 | 4 | 31 | 16 days |
| Coastline, FY2027 | 43 | 5 | 49 | −1 day (1 in your favour) |
Hero Coffee Van is paid on the spot, by card, and its suppliers wait 24 days. Its cycle is just below zero, 2 days in its favour: the suppliers’ credit carries the van’s stock. But Hero’s agreed supplier terms are 15 days, so 24 days is 9 days past: overdue, keep watch, and the box adds “but only because suppliers are kept waiting”. Bayside Home & Living is the opposite. In FY2025 its stock sat on the shelf for more than three months (103 days), with $2,100,000 of stock on hand and $1,755,000 of working capital tied up in stock and customers, less what it owed suppliers. By FY2027 the stock was moving faster (70 days), but customers were taking 55 days to pay instead of 30, and $2,493,002 was tied up. That is how a business can make a profit and still run short of cash (see 11.3 and Chapter 8B). Bayside’s forecast brings its cycle down to 21 days in FY2028 and 4 days by FY2030, as the stock is cut back and collections are fixed.
Coastline Leagues & Community Club is the third story, and the one to watch most closely. Members pay at the bar, so almost nothing is owed to the club (4 or 5 days), and its stock stayed steady at 43 days. What changed was how long the club took to pay its suppliers, against agreed terms of 15 days: 31 days in FY2025, 33 days in FY2026, then 49 days in FY2027, 34 days past its terms, when what it owed them rose from $460,000 to $690,000. Its cash conversion cycle went from 16 days, to 15 days, to 1 day in the club’s favour. In dollars, the suppliers were carrying $380,000 more than the club’s stock and what members owed it ($185,000 + $125,000 − $690,000).
That looks like good news, and the bank balance even rose, to $458,790. BusinessSolvency does not let it pass: step 2 of the READ FIRST box adds, in red, “but only because suppliers are kept waiting”, and the card asks the club to prepare to pay now. In that same year the club lost $717,000. The bank was held up by a $400,000 short-term loan and by $230,000 more owed to suppliers: other people’s money, not the club’s. Its working capital fell from $86,550 in FY2025 and $65,870 in FY2026 to −$461,130 in FY2027 (3.10). If the club carries on as before, the forecast shows the bank overdrawn by $148,252 at the end of FY2028.
The trend in supplier days is the warning. A club or business that keeps paying later and later is being carried by its suppliers, and when they lose patience the money goes out all at once. A club is especially exposed: its members’ joining fees and subscriptions are voluntary, and members can walk away when times are hard. Read the trend in your historical years first, then set the forecast days from it. Coastline’s full story is in Chapter 8E.
The cycle adds three kinds of day, and each is a day of a different flow: a stock day is a day of cost of goods, a customer day is a day of sales, and a supplier day is a day of purchases from suppliers. When those flows are very different in size, the days and the dollars can point different ways.
Riverbend Sports & Recreation Association in FY2027: 50 days of stock + 8 days of customers − 27 days of suppliers = a 31-day cycle. Yet in dollars nothing is tied up: stock $5,500 plus what members owe $7,000, less the $16,000 owed to suppliers, is $3,500 the other way. The club’s cost of goods (its bar stock) is small, so 50 stock days is only $5,500, while what it buys from suppliers (rent, overheads and insurance as well as stock) is much larger, so 27 supplier days is $16,000. Coastal Freight’s forecast for FY2029 is the opposite: a cycle of only 11 days (4 + 35 − 28), yet $2,512,503 is tied up, because 35 days of $50 million of sales is far more money than 28 days of its purchases.
The rule: read the days for the trend and against your own terms; read the dollars for how much cash the cycle actually holds. Both are shown under each year.
The days are worked out from the balances at the end of each period, the same way as your accounting software’s reports and the quarters you import. Larger businesses often run their own stock and debtors systems, and their accountant uses those figures: use them (tick Manual). Many smaller businesses have no working capital system at all; the Days are a simple one to start with. Most accounting software shows the balances, but not the days.
Your business needs enough working capital (current assets less current liabilities, Chapter 3.10) to carry its cycle even when income is only at its Breakeven level (Chapter 3.3). Breakeven income is the level that must still pay every bill, so it must also carry the stock and the customers’ unpaid accounts. A new business pays for set-up, stock and wages before its first sales are paid. Underestimating that working capital is a frequent reason new businesses run into a cashflow crisis, so arrange the finance before you start.
Credits: Breakeven Cashflow cash conversion cycle worksheet © 2019 Stephen Fairbairn, with thanks to csteja, “Back-to-Basics: Connections between the 3 Financial Statements”, ValuePickr forum, January 2017.
Chapter 8B — Worked Example — walks through Bayside Home & Living's full six-year story in detail, using exactly this Days-driven mechanism. Chapter 8 covers Ridgeline Landscaping's own cash and debtor story, a different business with a different lesson but the same underlying mechanism. Chapter 8E tells Coastline’s story, where slower payments to suppliers hid a club in serious trouble.