Averden Advisory · Editorial perspective
An increasing order book is encouraging, but it is not the same as an increasing bank balance. A business may need to buy materials, add capacity or pay people well before a new customer settles an invoice. Growth can therefore deepen an existing funding gap.
The first question is when cash leaves and when it returns. Look at the full journey from accepting an order to collecting payment, including stock, work in progress and any retentions. The terms written in a contract are only one input; the forecast should also reflect realistic payment behaviour.
The second question is what the additional work earns after the costs of serving it. Delivery complexity, rework, discounts and collection effort can make an apparently attractive customer less valuable than headline revenue suggests. Review contribution and capacity together rather than celebrating volume alone.
Before committing to expansion, compare a base case with a slower-payment scenario. Identify the point at which additional sales require additional funding and who will decide whether to proceed. Options may include revised payment milestones, a different order mix or a more measured pace of growth, depending on the circumstances.
Growth and resilience are not opposing objectives. A cash strategy helps an owner pursue opportunities with a clearer view of the commitments involved. Funding choices and contractual changes require appropriate professional advice; a forecast should inform those discussions, not substitute for them.
This article is general information and is not legal, financial or insolvency advice. Please seek advice on your specific circumstances.
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