Working Capital: The Silent Killer of SME Growth – What Every Founder Needs to Know

mcrouzier3
Oct 13
2 min read

By Alastair Eadie, Fractional CFO | Interviewed by sherloc

Let’s Get Real: Growth Can Break SME Growth

You’re growing. Revenue’s up. Customers are coming in. You’re winning… right?

Not necessarily.

Alastair Eadie, a seasoned fractional CFO, warns: growth without financial foresight is a trap. Many SMEs hit a wall not because they’re failing—but because they’re succeeding without planning for the cash demands that come with it.

What’s Working Capital, and Why Should SMEs Care?

Working capital is the cash you need to run your day-to-day operations. It’s tied up in:

Customer payments (often delayed),
Inventory (sitting on shelves),
Supplier bills (you still owe).

As your business grows, so do these needs. Double your turnover? You might need double the cash.

The Working Capital Danger Zone: £2M–£4M SME Turnover

SMEs in this range are especially vulnerable:

Too big for DIY finance.
Too small for a full-time CFO.
Stuck in a zone where every investment feels risky.

This is where overtrading happens—growing faster than your cash can handle. It’s one of the top reasons SMEs go under.

What SME Leaders Often Miss

Profit ≠ Cash: Your P&L might look great, but your balance sheet tells the real story.
Cash flow forecasts aren’t enough: You need strategic planning, not just survival-mode spreadsheets.
You can’t control when customers pay—especially if they’re bigger than you.

Concrete Takeaways for Founders

Know Your Numbers

Learn your debtor days, inventory days, and creditor days. These metrics help you forecast cash needs top-down—not just week-to-week.

Plan Ahead, Not in Panic

Don’t wait until you’re in a hole to ask for financing. Map out your working capital needs before growth hits.

Get Help

If you don’t have a finance team, bring in a fractional CFO or advisor. Even your accountant can help—if you ask the right questions.

Use Internal Talent Wisely

CEOs often have the insight but not the bandwidth. Delegate or outsource. Don’t try to do it all.

Educate Yourself

You don’t need an MBA. Just Google “working capital management” and start reading. There’s gold out there—blogs, podcasts, advisors.

Final Word from Alastair

“Cash flow is what kills businesses. You can be profitable and still go bust. Working capital is the silent risk. Understand it. Plan for it. Don’t let it sneak up on you.”

Need Help Navigating Working Capital? sherloc Is Here.

If this post hit home, you’re not alone. At sherloc, we work with SME leaders to demystify finance, build resilience, and make growth sustainable.

Whether you’re in the danger zone or just want to get ahead of it, we’re here to help.

📩 Reach out to us for a chat, a resource, or a referral.Let’s make sure your growth story doesn’t end in a cash flow crisis.

👉 Contact sherloc | Join the SME Leadership Circle

By Marie-Charlotte Rouzier, Head of Research, Strategy & Ecosystem Engagement at sherloc