How much of your cash is sitting with customers?

The figures the calculator opens with. A services business billing ₹48 lakh a month, on 45-day terms, where customers actually pay in 68 days. Payroll is ₹31 lakh a month. Every figure is invented.

Read the last two rows together. Getting from 68 days to 50, which is an ordinary improvement rather than a heroic one, releases ₹28.8 lakh. That is not a saving, it is cash that already belongs to the business and is currently sitting in other people's accounts.

For a company with nine months of runway, ₹28.8 lakh is most of another month. For a bootstrapped company, it is the difference between funding a hire from profit and not hiring.

Before negotiating terms or offering discounts, it is worth knowing which part of the cycle is slow. In most Indian B2B businesses the delay is spread across four places, and only one of them is the customer being difficult.

Before the invoice

Work delivered but not billed, milestones not raised, month-end invoicing runs that mean a job finished on the 2nd waits four weeks for its invoice. This is entirely within your control and is usually the largest single chunk.

Invoice acceptance

Purchase order mismatches, missing references, portals that reject formats, and business teams who have to confirm delivery before finance will process anything. Often days or weeks, and almost always fixable with a checklist.

The customer's payment run

Many large companies pay on fixed days. An invoice approved on the 3rd may wait for the 15th. Knowing the cycle lets you aim at it rather than miss it by a day.

Genuine delay

The customer has the invoice, it is approved, and they are simply holding cash. This is the part that needs escalation, and it is usually a smaller share than founders assume.

Measuring where your own days go, across ten recent invoices, takes an afternoon and tells you which of these four to work on. Most firms find the first two account for more than half the delay.

1. 01Invoice the same day the work is delivered or the milestone is hit. Not at month end, not when someone gets round to it.
2. 02Get the invoice format right first time: purchase order number, correct entity, correct GSTIN, the reference the customer's system expects. Ask them what it needs before the first invoice.
3. 03Send a polite note before the due date, not after it. A reminder three days out is administrative; a chase on day 50 is a conversation.
4. 04Fix an escalation ladder in advance: accounts payable at day 5 past due, your contact at day 15, their manager at day 30. Follow it every time, for every customer.
5. 05Ask new customers for part payment in advance, or milestone billing. It is far easier to agree at the start than to renegotiate later.
6. 06Track promise-to-pay dates and hold people to them. A customer who misses two promised dates has told you something.
7. 07Put receivable days by customer in the monthly pack, so the drift is visible before it becomes a quarter's worth of cash.

Note what is not on that list: early payment discounts. They work, and they are expensive. A 2% discount for paying 30 days early costs roughly 25% a year. Use them deliberately for a specific tight week, not as a standing policy to compensate for weak invoicing.

In most small companies, collections belong to nobody. Sales has moved on to the next deal, finance raises the invoice and waits, and the founder chases when the bank balance gets uncomfortable. That pattern produces exactly the days this calculator measures.

What works is duller. One named person owns the ageing report and runs the escalation ladder on a schedule. Sales stays involved for relationship escalation, because the account manager can often move an invoice with one message that finance cannot. The founder appears only at the end of the ladder, which makes it mean something when they do.

It is worth reviewing the ageing report weekly rather than monthly, for ten minutes. By the time a monthly report shows a problem, another cycle of invoices has already gone out on the same terms to the same customer.

If your company is registered as a micro or small enterprise under Udyam, the MSMED Act sets the payment period: 15 days where there is no written agreement, and 45 days at most where there is. Late payment carries interest at three times the bank rate notified by the RBI, compounded monthly.

There is a tax consequence for the buyer too. The rule that denies a deduction for amounts owed to micro and small suppliers until they are actually paid, previously section 43B(h), carries into section 37 of the Income Tax Act 2025 from the 2026-27 financial year. Large buyers' finance teams know this, which is why they now ask about MSME status at onboarding.

Used well, this is a polite reference in a follow-up email rather than a threat, and it moves invoices. Three cautions: medium enterprises are not covered, traders have been treated differently, and some buyers prefer suppliers who are not registered. Check your own registration and category with your CA.

Collection days sit behind several things founders usually treat as separate problems.

• ·Growth speed. Every rupee of new revenue ties up more cash in receivables, so a business collecting in 70 days can fund far less growth from its own profits than one collecting in 40.
• ·Hiring. The cash released by fifteen days of improvement is often a salary or two, funded without raising anything.
• ·Pricing conversations. A customer asking for both a discount and long terms is asking for two things, and the second one has a price you can now put a number on.
• ·Fundraising. A company carrying months of payroll in receivables raises more than it otherwise would, and dilutes accordingly.
• ·Diligence. Receivable days and the ageing profile are examined in every financial due diligence, and a long tail of very old invoices raises questions about revenue quality, not just collections.

Which is why collections is worth a founder's attention rather than being left entirely to whoever sends the reminders. It is one of the few levers that improves cash, growth capacity and valuation at the same time, and it costs nothing to pull.