Cash is a king
Working Capital Reality
B2G companies fail on timing, not margins. Verter Studio models working capital reality by linking revenue recognition, AR/AP delays, and cash availability in one coherent system.
2 min read
Working Capital Reality
There's a silent killer in startups that doesn't show up in most financial models, and it's called working capital. Your profit and loss statement says you're making money. Your balance sheet looks healthy on paper. But your bank account is empty, and you're not sure how you're going to make payroll next month.
The mechanics are simple but brutal. In B2G, your customers typically pay in ninety days. That's the standard — not the worst case, just the normal expectation. Meanwhile, your vendors want to be paid in thirty days, your employees expect their salaries twice a month, and your cloud hosting bill doesn't wait for government procurement cycles. The gap between when you incur costs and when you receive payment is sixty days of unfunded operations.
Let me make this concrete. If you're generating one hundred thousand dollars in monthly revenue from government contracts, you need roughly two hundred thousand dollars in working capital reserves just to bridge the timing gap. That's money sitting in your account doing nothing except keeping the lights on while you wait for checks to clear. Most founders don't budget for this, and it catches them off guard.
The problem compounds when you're growing. Every new contract means more implementation costs paid upfront, more team members to hire, more months of bridge financing until the revenue actually arrives. Growth in B2G isn't just an opportunity — it's a cash requirement, and many promising companies have failed not because their product didn't work but because they ran out of runway waiting to get paid.
This is why Verter Studio integrates all three financial statements: profit and loss, balance sheet, and cash flow. They're fully linked, so when you change an AR days assumption from thirty to ninety, the impact ripples through your entire model. You see not just what you've earned, but when you'll actually have the cash.
→ AR Days: 90 is government standard, 120+ is common for municipal
→ AP Days: 30 is typical for your vendors
→ The gap creates months of unfunded operations
→ Every $100K in monthly revenue needs ~$200K in reserves
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