The Offset Equation
Turn receivables into a hedge against volatility.
Supply-chain shocks, tariffs, and energy swings all compress margins. Accelerating cash flow is the internal lever that can offset that drag, converting an existing liability into resilience. Model it for your business.
Pinaka is autonomous receivables intelligence. It predicts which B2B customers will pay late, and why, weeks before the due date, then acts to prevent it. The Offset Equation puts a number on what that is worth: the cash released by collecting sooner, and the interest saved on the short-term debt that cash replaces.
The published example
- Annual revenue
- $10.0B
- DSO improvement
- 12 days
- Cost of short-term debt
- 9.0%
Assumes ~80% of revenue is credit sales. Illustrative model for discussion; your actual results depend on portfolio mix, terms, and execution.
Model it for your business
How the equation works
The Offset Equation takes three inputs: annual revenue, the improvement in days sales outstanding (DSO), and what your short-term debt costs. It assumes about 80% of revenue is sold on credit.
Working capital released = annual revenue × 80% ÷ 365 × days of DSO improvement
Annual interest saved = working capital released × cost of short-term debt
Estimated annual value created = annual interest saved
The published example, one step at a time:
- $10.0B of annual revenue × 80% on credit = $8.00B of credit sales a year.
- $8.00B ÷ 365 = $21.9M of credit sales per day. That is what each day of DSO holds.
- $21.9M × 12 days collected sooner = $263.0M of working capital released.
- $263.0M × 9.0% cost of short-term debt = $23.7M of interest saved a year.
Working capital released, by revenue and DSO improvement
Every figure below is the Offset Equation at 80% credit sales. The highlighted cell is the published example. Pinaka's stated outcome is a 10 to 15 day DSO improvement.
| Annual revenue | 5 days | 10 days | 12 days | 15 days | 20 days |
|---|---|---|---|---|---|
| $1.0B | $11.0M | $21.9M | $26.3M | $32.9M | $43.8M |
| $2.5B | $27.4M | $54.8M | $65.8M | $82.2M | $109.6M |
| $5.0B | $54.8M | $109.6M | $131.5M | $164.4M | $219.2M |
| $10.0B | $109.6M | $219.2M | $263.0M | $328.8M | $438.4M |
| $25.0B | $274.0M | $547.9M | $657.5M | $821.9M | $1.10B |
| $50.0B | $547.9M | $1.10B | $1.32B | $1.64B | $2.19B |
Annual interest saved, by revenue and cost of short-term debt
The same model at a 12 day DSO improvement. The saving moves in step with the rate: at 15% it is more than three and a half times the saving at 4%.
| Annual revenue | 4.0% | 6.0% | 9.0% | 12.0% | 15.0% |
|---|---|---|---|---|---|
| $1.0B | $1.1M | $1.6M | $2.4M | $3.2M | $3.9M |
| $2.5B | $2.6M | $3.9M | $5.9M | $7.9M | $9.9M |
| $5.0B | $5.3M | $7.9M | $11.8M | $15.8M | $19.7M |
| $10.0B | $10.5M | $15.8M | $23.7M | $31.6M | $39.5M |
| $25.0B | $26.3M | $39.5M | $59.2M | $78.9M | $98.6M |
| $50.0B | $52.6M | $78.9M | $118.4M | $157.8M | $197.3M |
What one day of DSO is worth
One day of DSO is one day of credit sales. Collect a day sooner and that much cash comes back into the business; at a 9.0% cost of short-term debt, it saves this much interest each year.
| Annual revenue | Cash released per day of DSO | Annual interest saved per day at 9.0% |
|---|---|---|
| $1.0B | $2.2M | $197K |
| $2.5B | $5.5M | $493K |
| $5.0B | $11.0M | $986K |
| $10.0B | $21.9M | $2.0M |
| $25.0B | $54.8M | $4.9M |
| $50.0B | $109.6M | $9.9M |
Where the days come from
Around 60% of B2B invoices are not paid on time. Late payment isn't the exception in business-to-business trade, it's the operating condition. And a single missed due date rarely stays contained. Contracts get renegotiated, collectors chase, disputes pile up, and finance leaders borrow to bridge the gap.
Pinaka disrupts Collections, Disputes & Deductions with a single, compounding effect: cash arrives sooner, and stays in the business.
- 10 to 15 daysDSO improvementCollect sooner by resolving the causes of delay before the due date.
- Up to 40%Lower collections effortAutomate prediction, outreach, and follow-up across the portfolio.
- ReleasedWorking capitalFree up cash trapped in late payments, disputes, and deductions.
- ReducedShort-term debtLess reliance on borrowing to bridge predictable cash-flow gaps.
- AcceleratedCash flowTurn receivables from a reactive cost centre into a strategic lever.
- FewerWrite-offsCatch deterioration early and act while recovery is still possible.
Questions about the model
What is the Offset Equation?
Pinaka's model of what collecting sooner is worth. It turns a DSO improvement into two numbers: the working capital released, and the interest saved each year on the short-term borrowing that cash replaces.
Why does it assume 80% of revenue is credit sales?
Only credit sales sit in receivables, so only they can be collected sooner. The model uses about 80% as its working assumption. Every result scales in a straight line with that share: if 40% of your revenue is on credit, halve each figure on this page.
Is the working capital released every year?
No. The working capital released is cash freed by collecting sooner. The annual interest saved is the yearly figure: it is what that cash saves on reduced short-term borrowing, and the model counts it as the estimated annual value created.
What DSO improvement should I model?
The model runs from 5 to 20 days. Pinaka's stated outcome is a 10 to 15 day DSO improvement, by resolving the causes of delay before the due date. Your actual results depend on portfolio mix, terms, and execution.
How do I get the number for my own portfolio?
Book a working session with our team. We'll walk your portfolio through Pinaka and show the cash you can protect, with a risk-free pilot to prove it.