This chapter answers a question that comes up the moment you try to fix a working capital figure directly: why won't Trade Creditors or Trade Debtors hold the number I just typed in? The answer is that these two balances are not free-standing inputs in BoardSolvency — they are derived figures, calculated automatically from your trading terms. Understanding this mechanism is essential to using the forecast correctly.
10.1 The Core Mechanism
Trade Creditors and Trade Debtors are not stored as raw balances you can overwrite. Every time the forecast is calculated, they are rebuilt from two simple day-count formulas:
Trade Creditors = COGS × (Creditor Days ÷ 365) Trade Debtors = Revenue × (Debtor Days ÷ 365)This is why a direct database edit to Trade Creditors or Trade Debtors gets silently overwritten the next time the app recalculates — the stored value is never the authority. Creditor Days and Debtor Days are the real inputs; the balance sheet figures are just the output.
10.2 Why This Design Makes Sense
It would be simpler to let directors type Trade Creditors and Trade Debtors in directly — but that would let the balance sheet drift out of sync with trading reality. Tying both figures to a Days input keeps three things honest at once:
| What it enforces | Why it matters |
|---|---|
| Consistency | Creditors always reflect actual COGS for that year, not a stale or manually-typed figure left over from a prior scenario. |
| Comparability | Because Days figures are a ratio, you can compare payment/collection behaviour across years of very different revenue scale — a $2.2M debtor balance means nothing on its own, but 55 days does. |
| Governance signal | Days figures are the language directors and auditors actually use to assess collections and payment discipline — not raw dollar balances. |
10.3 Worked Case Study — Bayside's Debtor Crisis
This is a real forecast, built and diagnosed inside the platform, showing how a Debtor Days figure alone can create — and then resolve — a genuine cash crisis. It picks up directly from Bayside's FY2026 position covered in Chapter 11.
Trade Debtors reached $2,211,918 against $14,679,091 revenue — a blended Debtor Days figure of roughly 55 days. For a retail business with an estimated 50% credit-account customer base on standard 30-day terms, the blended figure should sit closer to 15–20 days — and Bayside's own historical FY2024–2026 debtor days had held steady around 30 the whole time. A gap this size points to credit customers stretching to 90–100+ days without consequence — consistent with no formal debtor contract or follow-up policy in place. This uncollected working capital was the primary driver of the FY2027 Net Operating Cash Flow shortfall (-$763,257) and the resulting DSCR breach (-2.09x).
A parallel fix was needed on the creditor side. Creditor Days was set to 60, which recalculated Trade Creditors to $1,618,915 — restoring roughly the same ~61-day terms Bayside had maintained naturally throughout FY2024–2026. This is the same mechanism working in the opposite direction: instead of collecting faster from customers, the business held its own payments a little longer, easing the cash gap from the other side of the ledger.
As debtor policy took hold, blended DSO fell to ~35 then ~20 days across FY2028–2029, with Trade Debtors reducing to $1,041,096 despite revenue growing to $19,000,000. Net Operating CF strengthened to $2,881,450 and DSCR reached 9.44x. Nothing was "fixed" by editing a balance sheet number — the entire recovery came from changing the Days inputs that drive the formula.
10.4 How This Connects to Purchases
COGS is the purchases figure driving the creditor formula — it represents what the business has bought (stock, materials, direct inputs) in that period, not what it has necessarily paid for yet. Creditor Days is the gap between buying and paying. This matters beyond the income statement: reclassifying any cost into or out of COGS changes the COGS base that Creditor Days multiplies against, which changes the derived Trade Creditors figure — even with no change to Creditor Days itself.
10.5 Reading Days Figures Like a Director
| Days Figure | What "normal" looks like | What a spike usually means |
|---|---|---|
| Debtor Days | Pure retail: 0–15 days. Mixed retail/trade credit: 15–30 days. B2B trade credit: 30–75 days. | No formal terms, no follow-up discipline, or genuine customer cash stress flowing through to you. |
| Creditor Days | Typically 30–60 days depending on supplier terms. | Can look like nothing changed — costs quietly absorbed by stretching supplier payment, masking a real cash problem temporarily. Eventually suppliers demand cash terms or cut credit. |
10.6 Action Checklist — When a Working Capital Balance Looks Wrong
- Don't edit the dollar balance. Trade Creditors and Trade Debtors are calculated, not stored as authoritative inputs — a direct edit will be overwritten on the next recalculation.
- Convert the dollar figure to a Days number first. Divide the balance by the relevant revenue or COGS figure, multiply by 365. This tells you what you're actually looking at.
- Judge the Days figure against the business's real credit terms — not a generic benchmark. A wholesale business and a pure walk-in retailer have very different "normal" ranges.
- Adjust Creditor Days or Debtor Days, not the balance sheet field. Let the formula recalculate the dollar figure for you.
- Re-check both Days figures together after any change, since they move Net Operating Cash Flow in opposite directions and can mask each other's effect on the Board Report.
Chapter 11 — Worked Example — continues Bayside's story across all six years, from the FY2024 healthy foundations through the FY2026 debt-service crisis into the debtor governance failure and recovery covered here.