What is working capital?

On a project it is mostly three things: work done but not yet certified, bills certified but not yet paid, and material bought ahead of need. None of it is lost. All of it is unavailable.

working capital = receivables + inventory − payables

On an EPC project, unbilled work in progress and retention money belong in receivables even where the balance sheet parks them elsewhere.

One project's position at the end of a quarter.

The two middle lines are the ones a balance sheet usually parks elsewhere, and they are where most EPC working capital actually sits.

A profitable project can still run out of cash. Working capital is the difference between the two, and it is the number that decides whether the next mobilisation is funded by the client or by the bank.

The balance-sheet figure is a single photograph taken on the last day of a period, which is exactly when everyone is pushing to make it look better. The daily average across the period tells the truth; the closing figure tells the story.

Reading the closing balance

The period-end figure is taken on the one day everybody is pushing to make it look better. The daily average across the period is the honest number.

Leaving retention out

On a finished project, retention is often the largest single block of trapped cash and the one nobody is chasing, because the project team has moved on.

Improving it by paying vendors later

The number improves, the business does not. Worse rates, slower mobilisation and disputes follow, and none of it shows in the metric.

Crestline builds the position from the process rather than from the ledger: every case still open, where it is sitting, how long it has been there and what it is worth. That makes the number daily rather than monthly, and attributable to a step.