Cash Flow
Working capital is the price of growth
The problem
Every dollar of new revenue requires cash before it returns cash. Most owners discover the size of that requirement after committing to the growth.
Why it matters
Underestimating working capital is the most common way a good year turns into a credit-line dependency that takes three years to unwind.
How to know if you have this
- New contracts require materials or labor long before payment
- The line of credit funds operations rather than opportunities
- You cannot state your working capital requirement per $1M of revenue
- Vendor terms are tightening
How Advisory Motion solves it
- 01Measure current working capital intensity and the cash required per additional $1M of revenue
- 02Model the cash consumed by the specific growth you are planning
- 03Identify the cheapest sources of release — terms, turns, collections — before borrowing
- 04Build the financing conversation with a credible forecast attached
Illustrative example
$1M of new revenue cost $210K of cash
Modeling the intensity ahead of time let a manufacturer stage the growth across two quarters and negotiate vendor terms first — the expansion completed without drawing on the line at all.
Illustrative composite · not a client identification
Where this connects