The $100K Day: Unlocking Growth Capital by Optimizing Working Capital & Reducing DSO

In private equity-backed companies, speed matters—especially when it comes to unlocking liquidity. But too often, finance teams focus on external capital raises while overlooking one of the most powerful funding sources already sitting on their balance sheet: Receivables.

Today, we’re spotlighting one of the most overlooked levers in your working capital strategy—Days Sales Outstanding (DSO)—and how reducing it by just one day can unlock tens or even hundreds of thousands of dollars in usable cash.

What Is DSO—and Why Does It Matter?

Days Sales Outstanding (DSO) measures the average number of days it takes your business to collect payment after a sale has been made. The longer the delay, the more cash is tied up in your accounts receivable (AR).

For PE-backed companies under pressure to hit growth targets, delays in collections aren’t just accounting issues—they’re untapped liquidity.

DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days

Let’s say your company generates $30M in annual revenue, with an average DSO of 45 days. That means at any given time, over $3.7M is sitting in AR. If you could reduce DSO by just 1 day, you’d free up over $83,000 in cash.

Now imagine you’re running a $100M business with similar collection trends: that’s over $274,000 unlocked with a single-day DSO improvement.

Real Math, Real Impact: The $100K Day

Here’s a quick breakdown for a $50M revenue company:

• Annual Income: $50M
• Daily Revenue: ~$137,000
• DSO: 45 days
• AR: ~$6.2M

A 1-day DSO improvement = $137,000 in freed-up cash.

That’s the equivalent of:

• Hiring 1–2 strategic finance FTEs
• Funding a bolt-on integration project
• Increasing inventory ahead of seasonal demand
• Avoiding short-term borrowing or high-cost debt

In PE-owned businesses, that cash can mean the difference between reacting to a challenge—or investing into a strategic initiative.

Working Capital: The Most Overlooked Source of Growth Capital

When companies need funding for growth, the first instinct is often to raise capital—through equity, debt, or mezzanine financing. But that capital is often expensive, dilutive, and slower than internal options.

Optimizing working capital is often the fastest and cheapest way to finance growth.

Let’s break it down:

By tightening AR, renegotiating vendor terms, and improving cash forecasting, finance leaders can unlock millions in non-dilutive growth capital—while improving their company’s operating efficiency.

AR Is a Strategic Lever—Not Just a Back Office Metric

Too often, AR is seen as an admin task, managed by the collections team or buried in shared services. But in high-growth or margin-sensitive environments, AR becomes a strategic cash engine.

Tools like Pegasus Collect automate personalized reminder emails, categorize overdue invoices by reason codes, and give CFOs a real-time snapshot of who owes what—and for how long. That means:

• Fewer follow-ups fall through the cracks
• Payments are collected faster
• Finance teams can focus on what’s strategic, not just reactive

How PE Firms Are Using DSO to Drive Value Creation

Private equity firms increasingly see working capital as a lever in their value creation playbooks. Many now track DSO, cash conversion cycle, and AR aging as leading indicators—not lagging ones.

By incorporating DSO targets into post-close 100-day plans and budget cycles, they unlock:

• Better covenant compliance
• Improved operating cash flow
• More flexible M&A and capex timing

Final Thoughts: Every Day Counts

If your team is chasing growth, expansion, or even just margin protection, don’t overlook the cash you already have access to. A single day might be worth $100K or more—and it’s hiding in plain sight.

You don’t need to raise more money. You need to unlock what’s already yours.

Ready to see how much liquidity is tied up in your AR?