The deposit is 20%. The materials are 60% of cost.

Collections work on the tail of the cash cycle. The hole is dug in the first fortnight of the job, by a payment schedule nobody ever designed.

By Steve 5 min read
Abstract bridge artwork for The deposit is 20%. The materials are 60% of cost.

Most businesses that run out of cash while profitable have spent months attacking the wrong end of the problem. The credit control gets tighter, the statements go out weekly, debtor days come down from 62 to 51, and the overdraft is still at its limit every month. The reason is structural: collections act on the last third of the cash cycle, and the deficit was created in the first fortnight, when the materials were ordered and the deposit did not cover them. A deposit of 20% is one of the…

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