Payback is 14 months. The contract is 12.

A customer can be profitable over a lifetime and still be a cash liability at the point you win them, and faster growth makes the gap wider, not narrower.

By Steve 5 min read
Abstract bridge artwork for Payback is 14 months. The contract is 12.

A business can pass every profitability test and still run out of money growing. The tell is usually a mismatch between two numbers that live in different reports: how long a new customer takes to repay what it cost to win them, and how long that customer is contractually committed to stay. When acquisition payback runs past the end of the first term, every new customer is a bet on a renewal decision made by someone else, and the business is financing that bet from its own balance sheet. Why…

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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.

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