Revenue is up 30%. Cash is down.

Profitable businesses run out of cash most often while they are growing: the mechanism is arithmetic, not mismanagement, and it has a ceiling worth calculating.

By Steve 5 min read
Abstract bridge artwork for Revenue is up 30%. Cash is down.

A business that is losing money and running out of cash has a problem anyone can name. A business that is winning work, holding margin, and still watching the balance fall every month has a problem that gets misdiagnosed for years, usually as poor collections, or overspending, or bad luck with one customer. It is rarely any of those. Growth consumes cash before it produces cash, and the rate at which it does so is calculable from figures most businesses already have. What a pound of new revenue actually costs…

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