The order book is up 40%. The overdraft is at its limit.

Profitable businesses run out of cash for an arithmetical reason, and the number that governs it can be worked out on one side of paper.

By Steve 5 min read
Abstract bridge artwork for The order book is up 40%. The overdraft is at its limit.

There is a particular kind of distress that arrives with good news. Sales are ahead of plan, the pipeline is the healthiest it has been, the year-end accounts will look excellent. And yet the bank balance is falling every month, payment runs are being sequenced by who shouts loudest, and the finance conversation has quietly become the only conversation. Nothing has gone wrong. The business is doing exactly what a profitable, growing, working-capital-intensive business does: consuming cash faster than it produces it. Profit and cash diverge during growth, and the…

Keep reading for free

Create an account to read the rest.

The whole library is free. No card, no subscription, no trial that quietly ends. An account simply lets us know who we are writing for, and opens every article from here on.

  • Every article, in full, at no cost
  • New articles published every weekday
  • Takes about twenty seconds
Create a free account I already have one

Free means free. We will not charge you for the library, and you can read as much of it as you like.

Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

More on Growth strategy

Scroll to Top