Key Takeaway: A €39.9 billion retailer runs on negative working capital. Two of the three levers behind that are structure you will never copy. The third one is stock days, you already own it, and on a €2M business it is worth about €147,945 of cash rather than profit, one time. Illustrative.
By Samer Azar
Dear reader,
The company that owns Zara prints this line in its own FY2025 results, in millions of euros:
Operating working capital, minus 4,173. The year before, minus 4,181.
That is not my number. That is theirs, two years running.
A minus sign there means the business is funded by the people it buys from.
First, what you told me
I asked who you are in the last issue, and the shape held: founders and operators, finance leaders, and people here to learn, with no group in the majority.
So I keep writing things that work twice, once for the operator reading their own numbers and once for the advisor reading a client's.
One click if you have not done it.
Which best describes you?
Worth your time this week
The average new CFO is now 48.2 years old, down from 51.9 in a year. Nearly two thirds of those appointments are first-time CFOs, which quietly changes who is on the other side of your next finance conversation.
Four working-capital levers a finance team can pull in real time. Read it next to this issue: it argues the timing of money leaving, where this one argues the stock it is stuck in.
Goodwill testing may move from once a year to only when something breaks. Less compliance work, more judgment calls, against $97 billion of impairments in a single year.
Paid 106 days before paying
Seven months ago I showed you a company that gets paid long before it pays, and six weeks ago I promised you the number behind it.
The cash conversion cycle: how long your stock sits, plus how long your customers take to pay you, minus how long you take to pay your suppliers. Stock days, collection days, payment days. One number for how long your cash is stuck out in the world.
Three lines off the balance sheet, in millions of euros. Inventories 3,249. Receivables 1,166. Payables 8,587. Two more off the income statement: net sales 39,864, cost of sales 16,642.
Run the cycle on those:
Stock days: 3,249 ÷ 16,642 × 365 = 71
Collection days: 1,166 ÷ 39,864 × 365 = 11
Payment days: 8,587 ÷ 16,642 × 365 = 188
71 + 11 − 188 = minus 106.
It collects about 106 days before it pays.
2 out of 3 is proper design
Zara collects in 11 days. You will never collect in 11 days.
Their customer is standing at a till with a card in their hand. Yours gets an invoice and pays it when it suits them.
Eleven days is structure. You cannot buy it with better follow-up.
Then 188 days of payment terms. That is buying power. When you are the order book that keeps a factory running, you set the terms and the factory agrees to them.
So two of the three levers are structure.
Being funded beats paying late
Anyone can pay slower for one quarter.
Hold the payment run, and the balance looks better on the last day of the month while nothing about the business has changed.
DELAY IS NOT DESIGN.
Minus 4,173 this year. Minus 4,181 last year.
That is the same position held two years running, on €39.9 billion of sales. A stretch you took shows up once and then unwinds when the supplier notices. A cycle that holds for two years is being funded by stock that turns fast enough to cover the wait.
1 lever you control
That leaves stock days.
Five figures in, one number out. The same sheet has an empty tab for your own.
It is the one lever in the three that a business of any size owns outright. Nobody else has to agree to it.
Want the sheet? Here it is, with an empty tab for your five figures.
One thing I have learned reading this number on real businesses:
Composition beats the headline. Some stock is held on purpose against supply risk, and a minimum order three times your production run leaves dead capital no ratio shows. Read it per item and per month before you cut anything.
Illustrative, and the arithmetic is there so you can check it: on €2,000,000 of revenue with €1,200,000 of cost of sales, going from 90 days of stock to 45 releases about €147,945. Cash, not profit. One time, permanent, no financing and no new sales.
Copy the lever you own, not the one they have.
Cheapest cash: already inside
Most founders hunting for cash start outside the business. A bank, an investor, a factoring line, a friendlier overdraft.
Money you find inside has no interest rate, no covenant, no dilution and nobody to approve it. It is slower to find, which is the whole reason it gets skipped.
Pull those five figures. Work out your own number before you go asking anyone outside for theirs.
If you want the person who runs that search on your real numbers, apply for a strategy session.
One more thing, and I've been putting off saying it. I started a YouTube channel. I sat on the idea for months, which is the kind of drift I write to you about every week, so here it is.
One company a week: I open its own filing on camera and find the line that says where the cash really comes from. Zara went first, and this issue is the written half.
Watch it below, and if it's your kind of thing, subscribe so the next one finds you:
Files from building the AI CFO
What I am learning while I build it, one issue at a time.
Five months ago I built something that reads every client conversation and keeps what matters. For most of that time it was dead, and I did not know.
It runs again now. What it keeps landing on is the same boring pattern, in businesses that have nothing else in common: the money is not missing, it is sitting somewhere, and it has been sitting there for months.
I promised you what it compounded into. The honest answer is an architecture, and it has three rules.
Keep only what stands alone. Every conversation leaves a residue. Most of it is notes about one client on one day.
The system keeps the part that would still be true with the name removed, and throws the rest away. If it needs the meeting to make sense, it is a note, and notes do not compound.
What you keep has to change the next conversation. The kept items roll up into articles by topic: cash, pricing, hiring, sixty-two of them so far. Every new conversation starts from those.
That loop is the only sense in which knowledge compounds. Anything stored and never read again is a filing cabinet.
Rejection has to travel forward. This is the one I learned the hard way. When you throw a source out, everything built on it has to find out.
Otherwise the article still reads well, still cites its sources, and part of its foundation is gone. Finance readers know this one: you corrected the ledger, and every deck built off the old ledger still shows the old number.
You run a version of this without a machine. Every month-end teaches you something about your business, and almost none of it survives to the next one, because it lives in your head or a chat thread and nothing carries it forward. That is the gap.
Your spreadsheet is now Claude Code
Do not get intimidated. Do not put this off for later.
Know who the knocker-upper was? Before alarm clocks existed, there was a person whose job was to walk through town with a long stick, tapping on windows to wake people up for work. That job disappeared overnight when alarm clocks became cheap.
Spreadsheets are the long stick. Claude Code is the alarm clock.
Don't be a knocker-upper.
If you run the cycle on your own numbers this weekend, send me your stock days. If you already know the figure without looking, reply with it anyway.
Reply and let me know what's on your mind finance / AI / growth-wise. I read every one.
Take care of your cash, and it takes care of almost everything else.
Samer
Next Saturday, the second teardown.
Another company whose numbers are public, and another business that looks like it sells one thing and earns from another.
If you work in finance, you know a founder out looking for money while four months of stock sits in a warehouse. Forward them this issue.
Not subscribed yet? Join the CFO Lab for the weekly build.
I'm building Cash Actions in the open, for founders who want the drift caught while it is still small.
And one I read every week:
Frequently asked
What is the cash conversion cycle?
It is one number for how long your cash is stuck outside your bank account. Take how many days your stock sits, add how many days your customers take to pay you, then subtract how many days you take to pay your suppliers. Fewer days means cash comes back sooner.
How can a company run on negative working capital?
It sells and collects before its suppliers are due. The company that owns Zara reports operating working capital of minus 4,173 million euros in its FY2025 results, on stock of 71 days, collection of 11 days and payment terms of 188 days. Suppliers fund the operating cycle.
Is a negative cycle just paying suppliers late?
Paying late moves one quarter and unwinds when the supplier notices. Holding the same negative position two years running is different: it needs stock that turns fast enough to cover the delay. Check whether the position repeats before you read it as design rather than a stretch.
How much cash does cutting stock days free?
On €2,000,000 of revenue with €1,200,000 of cost of sales, moving from 90 days of stock to 45 releases roughly €147,945. Illustrative. It is cash, not profit, and it lands once. You free the money tied up in the shelves, and it stays freed while the new stock level holds.
Should you fix stock before raising money?
Look inside first. Internal cash carries no interest, no covenant, no dilution and no approval process, and the cycle is usually where it hides. Outside money is faster to find, which is why it gets reached for first. Work out your own number before you ask anyone for theirs.