Working capital: who pays whom first

Profit per lesson says nothing about when the money moves. The cash conversion cycle does: it is the number of days between paying for the work and getting paid for it.

Cycle = day the customer pays − day you pay for the work.

At Klasna the "work" is the tutor's payout, which comes about 10 days after the lesson, because tutors are paid twice a month.

• 16-lesson package. The family pays on day 0. Lessons run on days 1–70, on average day 35, so the average payout is on day 45. Cycle: 0 − 45 = −45 days. A negative cycle means the customer's money arrives first.
• Teams quarter on 60-day terms. Lessons run on days 1–90, on average day 45, payout on day 55. The invoice goes out on day 90 and is paid on day 90 + 60 = 150. Cycle: 150 − 55 = 95 days: Klasna funds each Teams lesson for about three months.

So Teams earns 339 UAH of gross profit per lesson, more than double a 1:1 lesson, and still needs cash to grow.

The cash conversion cycle has only two dates in it, so every change in your terms with customers or suppliers shows up directly in days.

Cycle = day the customer pays − day you pay for the work.

For a 16-lesson package the family pays on day 0 and the average lesson is on day 35. Today tutors are paid twice a month, about 10 days after the lesson: payout on day 45, cycle −45 days.

If Klasna paid tutors weekly, the payout would come about 4 days after the lesson, on day 35 + 4 = 39. The cycle becomes 0 − 39 = −39 days. Tutors would like it, and families would still fund the lessons, just for 6 fewer days.

The levers work the same way for every line:

• getting paid earlier (prepayment, shorter terms, monthly invoices) lowers the cycle;
• paying earlier (faster payouts, annual fees up front) raises it.

The typical slip is the sign: the customer's day comes first in the formula, so a cycle where customers pay first is negative.

Days describe one lesson. For the whole company you add up money tied up in day-to-day operations on one date: the working capital.

Working capital = receivables − payables − deferred revenue.

• Receivables: what customers owe for work already done, like an unpaid Teams invoice.
• Payables: what you owe tutors and vendors, due later.
• Deferred revenue: money customers prepaid for lessons not yet taught. Nobody will send a bill for it, but it is still an obligation: Klasna owes those lessons.

Klasna on 30 November 2026:

• receivables: 640,000 UAH;
• payables: 1,918,370 + 375,930 = 2,294,300 UAH;
• deferred revenue: 6,180,000 + 343,800 = 6,523,800 UAH;
• working capital: 640,000 − 2,294,300 − 6,523,800 = −8,178,100 UAH.

The usual slip is a sign: adding deferred revenue instead of subtracting it, or adding the payables. Group the items first, then subtract both groups from the receivables.

Working capital uses three kinds of items. Each one is about who holds whose money right now.

• Receivable (accounts receivable): work is done, the customer hasn't paid. At Klasna it is mostly the Teams invoice. Your money is with someone else, so it counts plus.
• Payable (accounts payable): the work arrived, you pay later. Tutor payouts due on the 5th, or November video and AI bills paid in December. Someone else's money is with you, so it counts minus.
• Deferred revenue: the customer paid, the lessons are still owed. Prepaid packages and the remaining months of Club annual plans. It also counts minus: the cash is in the bank, but it isn't free yet.

The cash conversion cycle is the same idea for one unit, measured in days: from the day you pay for the work to the day you get paid.

If you can say for any item "whose money is it, and where is it now?", the sign takes care of itself.

A working capital of −8.2 million UAH sounds alarming, but for cash it is good news. Negative working capital means customers and suppliers fund your operations: families paid for lessons in advance and tutors wait about 10 days for their payout. Klasna holds that money interest-free for as long as the business keeps running.

Most of the minus is not debt in the usual sense. Prepaid lessons are settled by teaching, not by paying cash back, and the payouts fall due on their normal dates.

The catch is timing. The pool is as large as recent prepaid sales:

• when package sales grow, the pool grows and releases extra cash;
• when sales slow, as they do every summer, the pool shrinks and cash goes out, even if the P&L looks fine.

So treat negative working capital as a loan you repay whenever families buy less, and plan the quiet months with that in mind.

Klasna's prepaid pool is a loan from families that renews itself as long as they keep buying. Each spring week new packages bring in more money than the lessons taught cost in payouts, so the pool and the bank balance grow together.

In summer the flow reverses:

• lessons bought in spring are still being taught, and tutors are paid for them every two weeks;
• few new packages arrive to refill the pool;
• deferred revenue falls, and the cash it stood for leaves the account.

The P&L sees none of this as a problem. Every lesson taught in July is revenue in July, so profit can stay positive while the bank balance drops. This is not a loss: it is the free loan being repaid by teaching.

The practical rule: a change in working capital is a real movement of cash. When prepaid sales are growing, cash runs ahead of profit; when they shrink, cash falls behind it. Plan the summer with a cash plan, not with the P&L.

Teams runs on positive working capital. Klasna invoices the company on the last day of each quarter, and the company pays 60 days later. On that last day the whole quarter's invoice sits in receivables, while the tutors who taught those lessons have mostly been paid already.

So the receivable at a quarter end is roughly one full quarter of Teams sales. If the sales plan grows Teams from 640,000 to 1,600,000 UAH a quarter, the receivable grows by the same amount:

1,600,000 − 640,000 = 960,000 UAH more waiting to be collected at each quarter end.

Klasna has to fund that gap from its own cash. The growth is profitable, yet every extra hryvnia of quarterly Teams sales is an extra hryvnia that sits with the customer for weeks.

A common slip is to count only the 60 days and divide by them, or to take the new quarter (1,600,000) as the extra amount. The extra cash tied up is the difference between the two receivables.

The same growth can release cash in one line and swallow it in another. For each line, ask one question: as it grows, does money arrive before I pay for the work, or after?

Lines that release cash as they grow hold other people's money in your account:

• prepaid lesson packages;
• Club annual plans paid up front;
• tutor payouts and vendor bills due later.

Lines that tie up cash as they grow hold your money somewhere else:

• invoices with payment terms, like Teams on 60 days;
• anything you pay in advance, like a yearly fee to the video platform: the money has left, and the service arrives month by month.

A prepayment you make works like a receivable. A prepayment you receive works like a loan from the customer. Profit per unit and cash per unit are different questions, so ask both before pushing a line to grow faster.