Q2 2026 Issue · Published April 15, 2026
DFW SMB Cash Flow Index
A quarterly working-capital read on Dallas-Fort Worth small and mid-market businesses — DSO, current ratio, and cash conversion cycle, segmented by industry, with commentary on what's moving and why.
Q2 2026 · Headline
DFW working capital is tightening unevenly: trades remain resilient, manufacturing is lengthening its cycle, services are bifurcating by end market.
National small business optimism softened into April, prices are still rising faster than sales, and credit is modestly harder to obtain. DFW operators feel this most in collection speed on commercial work and in inventory turns on imported components.
By Chris Gauvin and Taber Wetz
What is the DFW SMB Cash Flow Index?
Most published cash flow benchmarks come from public-company filings or national survey data — neither of which reflects what a $5M HVAC company in Plano or a $20M tier-2 manufacturer in Fort Worth actually looks like on a Tuesday morning.
The DFW SMB Cash Flow Index is a quarterly, DFW-specific working-capital read produced by Local Fractional. Each issue gives operators a directional benchmark across the four metrics that matter most at our scale:
- Days Sales Outstanding (DSO) — how quickly invoices turn into cash.
- Current Ratio — short-term liquidity; the first check most lenders run.
- Cash Conversion Cycle (CCC) — how long a dollar of revenue is tied up in the operating cycle.
- Working Capital as % of Revenue — a size-normalized measure of capital efficiency.
Output is aggregated and directional. It is designed to help an owner or operator answer the question: "Are my numbers where they should be, given the industry I'm in and the quarter we're in?"
Industries covered
The index reports benchmarks for the industries we serve in DFW where we have a defensible sample size:
Methodology
The index is a proprietary quarterly read on Dallas-Fort Worth small and mid-market cash-flow conditions. It blends what we see on the ground across Local Fractional client engagements with a curated set of public and industry-benchmark inputs, weighted for DFW regional conditions.
- Focus: Privately-held operating businesses in the DFW metroplex, $1M–$50M revenue.
- Segmentation: Eight industry buckets aligned to the sectors we serve.
- Outputs: Directional ranges and a representative LF median for each industry, plus QoQ direction and a quarterly narrative.
- Privacy: No single client or operator can be identified from the published output. Underlying inputs are aggregated; any segment that would risk identifiability is rolled up or omitted.
- Cadence: Published the first business day of January, April, July, and October.
- Intent: A directional tool for operators to self-assess against peers. Not audit-grade; not a substitute for professional accounting, legal, or investment advice.
The specific weighting, source-mix, and calculation conventions are Local Fractional's proprietary methodology and are not published.
Q2 2026 — What we're seeing in DFW
Three themes define the Q2 working-capital picture for Dallas-Fort Worth operators.
1. Trades are holding the line
HVAC, plumbing, electrical, and roofing businesses headquartered in the Metroplex are keeping receivables tight on residential work and managing commercial A/R through selective project qualification. Texas population growth and continued in-migration keep service demand steady; the risk is concentration on a handful of slow-paying general contractors. Operators with healthy commercial books should be pressure-testing collection policy monthly, not quarterly.
2. Manufacturing is lengthening
Tier-2 and tier-3 manufacturers across DFW are carrying more inventory than they want, driven by import-component exposure and defensive safety stock. Days inventory outstanding has drifted up; cash conversion cycles are back toward their 2024 peaks. The operators winning Q2 are the ones aggressively converting stale SKUs and tightening payable terms on the non-strategic supplier base.
3. Services are bifurcating
Professional services firms tied to real estate, construction, and legal M&A are seeing DSO creep as clients stretch payment terms. SaaS and technology businesses with recurring revenue are, by contrast, posting near-zero or negative cash conversion cycles thanks to annual prepays — the best working-capital position in the index. End-market matters more than industry label this quarter.
Macro Backdrop
Against this, the national small-business environment softened entering Q2. Owner optimism is below long-run averages, the share of owners reporting unfilled job openings remains elevated at roughly a third of small firms, net-25% are still raising prices, and a small but meaningful net share report loans harder to obtain than three months ago. Uncertainty readings are well above historical norms. Translation for DFW: cheap capital and easy refinancing aren't returning this quarter — working-capital discipline is the lever.
Q2 2026 Benchmarks
Local Fractional's aggregate read for Q2 2026, segmented by industry. Ranges reflect the observed band across the DFW small and mid-market operator set; the "LF Median" column is our central estimate for a representative operator at the midpoint of each range. Quarter-over-quarter direction indicates whether the range has widened (↑), tightened (↓), or held (↔) versus Q1 2026.
Days Sales Outstanding (DSO) — days
Lower is better. Residential/commercial mix drives most variance within an industry.
| Industry | DFW Range | LF Median | QoQ |
|---|---|---|---|
| HVAC | 25–55 | 38 | ↔ |
| Plumbing | 22–50 | 34 | ↔ |
| Electrical | 45–80 | 62 | ↑ |
| Roofing | 30–75 | 48 | ↑ |
| Manufacturing | 45–70 | 56 | ↑ |
| CPG | 35–60 | 47 | ↔ |
| SaaS & Tech | 30–55 | 42 | ↔ |
| Professional Services | 40–70 | 54 | ↑ |
Current Ratio
Current assets ÷ current liabilities. 1.5–2.0 is the textbook healthy band; SaaS often sits higher due to deferred revenue dynamics.
| Industry | DFW Range | LF Median | QoQ |
|---|---|---|---|
| HVAC | 1.3–2.2 | 1.7 | ↔ |
| Plumbing | 1.3–2.1 | 1.7 | ↔ |
| Electrical | 1.2–2.0 | 1.6 | ↓ |
| Roofing | 1.2–2.0 | 1.6 | ↔ |
| Manufacturing | 1.5–2.5 | 2.0 | ↓ |
| CPG | 1.4–2.0 | 1.7 | ↔ |
| SaaS & Tech | 1.8–3.5 | 2.4 | ↔ |
| Professional Services | 1.3–2.2 | 1.7 | ↓ |
Cash Conversion Cycle (CCC) — days
DSO + DIO − DPO. Lower is better; SaaS frequently prints near-zero or negative thanks to annual prepays.
| Industry | DFW Range | LF Median | QoQ |
|---|---|---|---|
| HVAC | 5–30 | 17 | ↔ |
| Plumbing | 5–28 | 15 | ↔ |
| Electrical | 20–60 | 38 | ↑ |
| Roofing | 15–55 | 30 | ↑ |
| Manufacturing | 60–110 | 84 | ↑ |
| CPG | 55–100 | 74 | ↔ |
| SaaS & Tech | −30–20 | −4 | ↔ |
| Professional Services | 25–60 | 42 | ↑ |
Working Capital as % of Revenue
(Current assets − current liabilities) ÷ trailing-12-month revenue. A capital-efficiency proxy that normalizes size.
| Industry | DFW Range | LF Median | QoQ |
|---|---|---|---|
| HVAC | 6–14% | 10% | ↔ |
| Plumbing | 5–13% | 9% | ↔ |
| Electrical | 8–18% | 13% | ↑ |
| Roofing | 7–16% | 11% | ↑ |
| Manufacturing | 18–32% | 24% | ↑ |
| CPG | 15–28% | 21% | ↔ |
| SaaS & Tech | −5–10% | 2% | ↔ |
| Professional Services | 8–18% | 13% | ↑ |
Values reflect Local Fractional's aggregate view of the DFW small and mid-market operator set as of Q2 2026. They are directional benchmarks for operator self-assessment, not audit-grade figures. Revenue tier focus: $1M–$50M.
If you're outside the range
Being outside the Q2 band isn't automatically bad — but it's always worth understanding why. Start here:
If your DSO is higher than the DFW range
- Aged A/R over 60 days as a % of total — is it rising?
- Customer concentration — is one slow payer distorting the whole metric?
- Invoicing cadence — weekly vs bi-weekly vs end-of-month?
- Terms on commercial jobs — are you negotiating them, or accepting customer defaults?
If your CCC is longer than the DFW range
- Slow-moving inventory — do you have SKUs that haven't turned in 90+ days?
- Payable terms — are you paying faster than you need to on non-strategic vendors?
- Deposits and milestone billing — could you be collecting earlier in the job cycle?
- Is the cycle lengthening as you grow? Scaling revenue on a longer CCC is the classic growth trap.
Q3 2026 ships July 1
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