The examples and architectures in this series are my personal educational, non-commercial experiments; they are not an offer of IT or consulting services.
Post #13 ended on a Thursday payment the balance couldn't carry. What happened next wasn't on anyone's calendar. Nobody puts "draw €200,000 for nine days" on an agenda. It happens in the gap between two spreadsheets, which is where most of finance's quiet decisions live.
The month described below is a composite built from patterns I've seen repeat across finance teams over the years. The amounts, the days and the interest rate are illustrative; they don't describe a specific company, bank, or credit line, and your own rate will differ.
Three short drawdowns, one invisible month
The arithmetic is small. That's the first thing worth saying.
Interest on a short draw is roughly amount × annual rate × days ÷ 360. Nothing in that formula is frightening, which is exactly why it goes unnoticed: each draw is too small to deserve an agenda item and too routine to deserve a second look.
| Draw | Amount | Days open | Illustrative interest |
|---|---|---|---|
| 1 | €120,000 | 5 | ≈ €117 |
| 2 | €200,000 | 9 | ≈ €350 |
| 3 | €80,000 | 14 | ≈ €218 |
| Month | — | 28 | ≈ €684 |
Against the size of a business that would sit behind draws like these, the month's interest is a rounding error. That isn't the point. The point is the days column.
Why the days are the only lever
The amount is set by the payment that has to go out. The rate is set by a contract that doesn't get reopened mid-month. The days are the only part of the cost that responds to what you know, and when you know it.
| What it looks like | What's actually true |
|---|---|
| A credit line costs nothing until you need it | It costs by the day, including the days nobody decided to need it |
| The line gets drawn because there's no alternative | Often it gets drawn because the gap was only visible on the day the payment was due |
| A three-day drawdown is a treasury decision | In some teams I've seen, it's a side effect of a payment run that never got checked against the balance |
| The interest line is the cost of the gap | It's the cost of the days, and the days depend on how early the gap was seen |
What changes if the gap is seen three days earlier (illustrative)
Seeing a gap earlier doesn't make it disappear. It gives you options that don't exist on the day itself: move a payment within its terms, chase the receipt that slipped, draw a smaller amount for fewer days. Suppose each of the three draws above ends three days sooner.
| Scenario | Days open | Illustrative interest |
|---|---|---|
| Gap seen on the day the payment is due | 28 | ≈ €684 |
| Gap seen three days earlier | 19 | ≈ €451 |
That's roughly €233 a month, or about €2,800 a year. Not a saving to build a department around. It's a useful measure of what a few days of visibility are worth, on one line, in one illustrative month, and the same logic applies to anything that's priced by the day.
The cost of a gap isn't paid on the day of the draw. It's paid in the days nobody knew it was coming.
Illustrative composite from Post #14. The amounts, days and 7% a year are made-up for the example; they do not describe a specific company, bank or credit line.
What a gap check would actually have to show
It needs the signals from Post #13 (payments due by day, expected receipts with a view on how likely they are to slip, and the minimum buffer) and adds two more.
| Signal | What it tells the team |
|---|---|
| First day below the buffer | When a decision is needed |
| Lead time | How many days ahead that day is visible, which is how many options are still open |
| Cost per day of the gap | Amount × rate ÷ 360, so the team can see what each day of waiting is worth (use your own rate) |
I haven't put a script behind this one. The formula fits on one line, and the hard part isn't the arithmetic: it's knowing about the gap early enough for the arithmetic to matter. The first test I'd run is a simple one: take last quarter's drawdowns, write down the day each gap first became visible, and compare it with the day you drew.
Follow the series
Post #15 asks how far ahead a gap has to be visible to change the decision, and what a 13-week rolling cash forecast actually has to contain to show it.