The stock a service business doesn’t think it holds

Your balance sheet shows no inventory. Your bank balance disagrees, and the gap between finishing work and invoicing it is usually where it went.

By Steve 5 min read
Abstract bridge artwork for The stock a service business doesn’t think it holds

Ask an owner of a service business where their working capital sits and the answer is almost always debtors. There is no warehouse, no stock, nothing on a shelf gathering dust. The balance sheet agrees: inventory is a rounding error or absent entirely. And yet the firm runs a persistent overdraft, feels tight in the month after a busy month, and cannot explain why a profitable year produced no cash. A service business does hold inventory. It holds work that has been delivered and not yet invoiced, and unlike a…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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