Revenue Without Cash

Sales are up. The bank account is empty.

01
Situation
A distributor has its best sales year and cannot pay suppliers on time. The founder cannot see where the money went.
02
Evidence
- Receivables have grown faster than sales
- Credit terms are agreed case by case
- Stock has built up in slow lines
- No weekly cash view
03
The decision
Borrow to cover the gap, or change how credit, collections and stock are managed?
04
Analysis
Profit and cash diverged because working capital absorbed the growth. The Money function has no rules for credit and no rhythm for reviewing cash.
05
Framework
The cash conversion cycle: days of stock + days receivable − days payable.
06
Resolution
Credit limits by customer, a weekly collections routine, and a stock review cut the cycle before new borrowing was needed.
07
Founder exercise
Apply it to your own business:
- Calculate your cash conversion cycle
- Find your ten largest overdue balances
- Write your credit rules

Situation