The Durable Growth Imperative: Working Capital

Our focus on durability reflects the fact that today’s market rewards operational efficiency and resilience over reckless growth. The most durable companies are not only managing margins; they are also managing cash. This is why, in addition to durability levers like retention, go to market efficiency, and OpEx, there is one more lever that we’d be remiss not to explore: working capital. 

Perhaps the most overlooked ingredient for true durability, strong working capital means more control over your runway, more flexibility in your operating plan, and more capacity to reinvest — all without raising a single extra dollar of external capital. 

What is Working Capital, and Why Should You Care? 

As a refresher, working capital equals your company’s current assets minus its current liabilities. In practical terms, it reflects how efficiently your business can fund day-to-day operations. For growth-stage B2B companies (especially SaaS companies), working capital boils down to a few key points: 

• Deferred revenue: Are your customers paying you upfront for services you’ll deliver over time? 

• Accounts receivable (AR): How long does it take you to collect cash after invoicing? 

• Billing terms: Are you setting yourself up to get paid quickly, or are you leaving cash on the table? 

Too often, founders focus on top-line growth while overlooking whether that growth is actually cash-efficient. That tradeoff might have been tolerable during the zero-interest-rate policy (ZIRP) days, but it isn’t anymore. In today’s market, cash-efficient models are often outperforming faster-growing but cash-burning peers. And all of that matters to investors and potential buyers. 

The Durability Difference 

Our 2025 Growth Index spotlights a critical difference between durable and non-durable companies: cash flow profile. Specifically, durable growers are far more likely to have favorable working capital dynamics, including: 

• Prepaid annual contracts that boost deferred revenue and reduce accounts receivable (AR) balances; 

• High billing discipline, resulting in consistent collections and lower days sales outstanding (DSO); 

• Customer-funded growth, where incoming cash covers operating needs, even ahead of revenue recognition. 

Compare that to non-durable companies, which often operate with: 

• Long payment cycles and rising AR balances; 

• Usage-based billing that introduces volatility; 

• Low leverage in negotiating upfront payments. 

So what does this all mean? 

Durable companies — those with favorable working capital dynamics — have greater flexibility to weather shocks, fund growth bets, and improve their valuation profile. In fact, 75% of Edison’s most durable companies — the ones projected to return 3x+ — also show strong working capital performance. These are the businesses investors want to back and acquirers want to buy. 

Four Ways to Improve Your Working Capital Position 

If your business is operating with tight cash margins or waiting too long to collect revenue, here are four things you can try to shift the balance: 

1. Push for upfront contracts 
   • If you’re defaulting to monthly billing, you might be leaving money on the table. Think about how you can move to annual prepayment. Incentivize this with discounts, service upgrades, or customer success perks. 
2. Get serious about collections 
   • Review your AR aging report regularly. Automate reminders, assign ownership, and tie collections to compensation if needed. 
3. Reduce your DSO (Days Sales Outstanding) 
   • You know the saying: what gets measured gets managed. The more you track your DSO, the more likely you are to improve it. Small changes in invoicing discipline — like sending bills faster or accepting multiple payment methods — can unlock big results. 
4. Reinvest gains into high-ROI areas
   • Don’t just sit on cash. Durable companies use their improved working capital to reinvest in GTM productivity, product enhancements, and customer success. Consider where you might be able to put your working capital to work.  

Driving towards durability can make all the difference for your company, and working capital is one of the most controllable — and overlooked — ways to get there. Ask yourself: What would better working capital unlock for our business this year? 

For more insights on durable growth, download the 2025 Growth Index.