Growth was funding itself, right up until it stopped

Businesses paid in advance generate cash while they grow and consume it the moment they plateau: long before the P&L gives any warning.

By Steve 5 min read
Abstract bridge artwork for Growth was funding itself, right up until it stopped

There is a particular kind of surprise that arrives in businesses that take money up front. Revenue is flat rather than falling. Margins look the same as last year. Nobody has lost a major account. And yet the bank balance, which spent three years quietly climbing, has started to drift down, and nobody can point to the reason. The reason is usually that the balance was never a store of profit. It was a store of unfinished obligations, and the size of that store depends on how fast the order…

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