When business owners think about selling their business, their attention is usually drawn to the headline number: the valuation.

But there’s another figure that can have just as much impact on how much money ends up in your pocket, and it’s often overlooked until the final stages of the sale. That figure is working capital.

Too many business owners only discover its importance when they’re sitting at the closing table. By then, there’s very little they can do to influence the outcome.

What Is Working Capital and Why Does It Matter?

Working capital is the cash tied up in the day-to-day operation of your business. It includes items such as accounts receivable, inventory, and accounts payable.

From a buyer’s perspective, working capital tells a story about how efficiently your business operates.

If customers take too long to pay, large amounts of cash are locked in unpaid invoices. If inventory has been sitting on shelves for months, valuable capital is tied up in stock that isn’t generating returns.

A buyer doesn’t just see these as operational issues. They see a business that needs more cash to keep running. In other words, the engine requires more fuel than it should.

That can reduce the value of your business or lead to adjustments that reduce the amount of cash you actually receive at completion.

Buyers Want Efficient Businesses

Businesses that manage working capital well are more attractive because they demonstrate strong operational discipline.

Healthy cash flow, efficient billing processes, and well-managed inventory all signal that the business can generate profits without unnecessary friction. For buyers, this reduces risk. For sellers, it often strengthens negotiating power.

The Best Time to Improve Working Capital Is Before You Sell

Optimising working capital isn’t something you should leave until you’re preparing legal documents.

It should form part of a broader exit strategy years before you intend to sell.

Simple improvements can make a meaningful difference, including:

  • Reducing debtor days through more effective invoicing and collections.
  • Reviewing inventory levels to eliminate slow-moving or obsolete stock.
  • Improving purchasing processes to avoid unnecessary cash being tied up.
  • Monitoring cash flow regularly rather than only reviewing year-end accounts.

These changes don’t just improve your exit. They often make your business more profitable and enjoyable to run today.

Building a Business Buyers Want

At Exit Factor, we help business owners prepare for successful exits long before they go to market.

Our structured approach identifies the operational improvements that increase business value, reduce buyer concerns, and create stronger negotiating positions.

Working capital is just one piece of the puzzle, but it is one that can significantly influence your final payout.

The businesses that achieve the strongest exits are rarely the ones that simply have the highest profits. They are the businesses that operate efficiently, generate consistent cash flow, and demonstrate that they can thrive without unnecessary complexity.

If you’re planning to exit in the next few years, now is the time to start improving the fundamentals that buyers value most. Because when the right buyer arrives, it’s often the hidden details that determine how much value you ultimately take home.