Most cash flow conversations in growing companies default to the same conclusion: we need more revenue. More sales will fix the cash position. The top line is the answer.
Sometimes that is correct. Often it is not. Revenue growth, as the previous article explained, can actually consume cash rather than generate it, particularly in businesses with long payment cycles, working capital intensity, or high reinvestment requirements.
The five levers in this article are all operational. They do not require new clients, new products, or a sales push. They require reviewing processes and terms that most businesses put in place once and never revisit. The combined cash impact of addressing all five is typically CHF 100K to CHF 500K for a mid-size company, released from the existing business in three to six months.
Lever 1: Shorten Payment Terms and Invoice Faster
The fastest way to bring in cash from the existing business is to send invoices sooner and give clients less time to pay.
Most companies with payment term problems have two problems, not one. The first is the payment terms themselves: 60-day terms in a business where 30 days is reasonable is 30 days of unnecessary cash delay. The second is invoice timing: invoices that are sent on the 5th for work done in the previous month are already 5 days late before the payment clock starts.
On invoice timing, the fix is simple and free. Automate or systemise the invoicing process so invoices go out on the last day of the month, or the first working day of the new month, for the period just completed. For project milestone billing, invoice within 24 hours of the milestone being agreed as complete, not at the end of the month. For recurring services, invoice in advance of the service period rather than in arrears. Each of these changes moves cash forward without changing the relationship with the client at all.
On payment terms, the conversation with clients requires more care but is usually more straightforward than businesses expect. Many long payment terms are not contractual. They exist because they were never explicitly agreed on the other way and the client defaulted to their own standard terms. A review of your actual contractual payment terms against what you are asking clients for will often reveal terms that can be shortened simply by updating the standard terms on the invoice.
For new clients in Switzerland, 30-day net terms are standard in most B2B relationships. 60-day terms are not uncommon in larger corporate relationships but should be the exception, not the default. If your current standard is 60 days, moving to 30 days for new clients releases half the receivables cycle on new business immediately.
Lever 2: Renegotiate Supplier Terms
The mirror image of shortening receivables is extending payables. Paying suppliers later keeps your cash in your account longer.
Most supplier terms in Switzerland are 30 days. Many suppliers will offer 45 or 60 days on request, particularly from customers who pay reliably and represent significant volume. The conversation is not about being a difficult client. It is about cash management on both sides, and most professional procurement and finance teams approach it as such.
The approach: identify the five to ten largest suppliers by annual spend, review the current payment terms for each, and have a straightforward conversation about whether 45 or 60 days would be acceptable. In many cases, the answer is yes, and the cash release for a CHF 5M spend base moving from 30 to 45 days is approximately CHF 200K.
Two cautions. First, do not unilaterally extend payment terms without discussing them with the supplier. Paying late without agreement damages relationships and can result in late payment fees, credit holds, or worse. Second, do not optimise payables terms with strategic suppliers where the relationship and their production prioritisation matters more than the cash benefit. The calculation needs to include relationship risk.
For non-strategic, commodity suppliers where there are alternatives, the cash optimisation argument is strong. For sole-source suppliers or suppliers where the relationship determines quality and availability, it is a more nuanced trade-off.
Lever 3: Reduce Inventory
For product-based businesses, inventory is often the largest single component of working capital, and inventory that is not turning quickly is cash sitting on a shelf.
The cash release from inventory optimisation does not come from a one-time clearance. It comes from reducing the ongoing level of inventory the business chooses to hold relative to its rate of sale. A business carrying 60 days of inventory where 45 days would be sufficient is holding 15 days of cash in stock permanently. At CHF 3M of annual cost of goods sold, that is approximately CHF 125K of permanently absorbed cash.
The analysis starts with the current inventory turnover ratio (cost of goods sold divided by average inventory) and a comparison to the target or industry benchmark. If the ratio is lower than it should be, the next question is why. The causes typically fall into three categories: safety stock set too high because of unreliable supply chain, slow-moving SKUs that are not being written off or liquidated, and purchasing decisions driven by minimum order quantities or price breaks that result in excess stock.
Each cause has a different solution. Safety stock optimisation requires a review of supplier lead times and reliability. Slow-moving inventory requires a write-off decision or a clearance price decision. Purchasing discipline requires either renegotiating MOQs or accepting a higher unit price in exchange for lower stock levels.
For Swiss companies with tight storage space, the additional benefit of lower inventory is operational: less space consumed, lower handling costs, cleaner stock management.
Lever 4: Invoice Milestones and Prepayments
For services businesses, consulting firms, and project-based companies, the standard billing practice is often to invoice on delivery or on completion. This means the company is financing its clients’ projects with its own cash throughout the delivery period.
The alternative is milestone billing or advance payments, which shift the cash timing forward and reduce the financing burden.
Milestone billing structures the payment schedule around specific deliverables or project phases rather than completion. A CHF 200K project billed in three milestones, CHF 60K on contract signature, CHF 80K on mid-project delivery, and CHF 60K on completion, produces a fundamentally different cash profile than the same project billed on completion. The company receives 30 percent of the project value before any work begins and 70 percent before completion.
Advance payments, sometimes called mobilisation fees or retainers, ask the client for a payment at or before project commencement to cover initial costs or to reserve capacity. These are standard in many professional services sectors and not unusual in Swiss business contexts, particularly for longer engagements or custom work.
The commercial objection is that clients will push back. Some will. Others will accept it as standard practice, particularly if the contract terms are clearly written and the justification is presented professionally. A straightforward explanation that the payment structure reflects the project cost phasing and is consistent with the company’s standard commercial terms removes most of the friction. The key is to build this into the standard contract template rather than negotiating it case by case.
Lever 5: Accelerate Collections on Overdue Receivables
A large proportion of the average company’s receivables are technically overdue at any given time. Many of these are not actively managed. They are on a list, waiting for someone to follow up, and the follow-up happens irregularly and without a clear escalation process.
The cash release from improving collections discipline is often the fastest of the five levers because the money already exists, it has already been invoiced, and the only thing standing between it and your bank account is a process.
The starting point is an ageing analysis: a breakdown of receivables by days overdue. Any invoice more than 10 days past due should be actively followed up. Any invoice more than 30 days past due should be escalated. Any invoice more than 60 days past due should be reviewed for credit risk.
The follow-up process should be systematic. An automated payment reminder sent at the due date, a personal call or email at 10 days overdue, an escalation to the client’s finance director or a more senior contact at 30 days, and a formal written notice at 60 days. This sequence is not aggressive, but it is consistent, and consistency is what produces faster payment.
For Swiss companies, the legal framework for debt collection is clear and accessible. A formal Betreibung through the relevant cantonal office is a straightforward process that most creditors are reluctant to face. Simply being willing to use it, and communicating that willingness, accelerates resolution on long-overdue invoices without the need to actually file in most cases.
The cash impact of moving receivables from 55 days outstanding to 45 days on a CHF 4M annual revenue base is approximately CHF 110K. That is a meaningful number, achieved entirely from the existing business without changing anything except the follow-up process.
Combining the Levers
Each of the five levers works independently. Together, they compound. A mid-size company that shortens payment terms by 10 days, extends key supplier terms by 15 days, reduces inventory days by 10, builds advance payment clauses into new project contracts, and reduces average collection period by 8 days is looking at a total working capital release in the range of CHF 300K to CHF 600K, depending on the company’s size and current working capital position.
None of these changes require new revenue, new products, or new clients. They require reviewing commercial terms and operational processes that were designed for a smaller or simpler business and have never been updated as the company grew.
The controller’s role in this analysis is not simply to calculate the potential release. It is to present the finding with the specific levers, the estimated cash impact of each, and a realistic assessment of which are actionable given the company’s commercial relationships and operational constraints. That combination of analysis and pragmatism is what translates a working capital review from an interesting exercise into a decision.
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Alessandro Ratzenberger is a fractional CFO and business controller based in Zurich, with 15 years of operational finance experience at Dufry Group and Bomi (UPS Group).
