Hey Reader,

Let me show you the most dangerous ninety days in business. They look completely normal. That’s what makes them dangerous.

Picture a small custom shop. It’s a composite of a thousand real ones, so make it a cabinet maker, a sign company, a machine shop, whatever’s near you. Day one: they win a ten thousand dollar job and spend four thousand on materials. Money out the door before a single cut gets made. Day thirty: the crew finishes, the customer is thrilled, handshakes all around. Day thirty-one: the invoice goes out, net thirty. Day sixty-one: "it’s processing." Day ninety: the check finally lands.

For ninety days, four thousand dollars of that shop’s money, plus a month of payroll, lived in somebody else’s bank account. The job was profitable the whole time. The shop was poorer the whole time.

One job like that is an annoyance. Eight of them running at once is a company that just had its best sales quarter ever and cannot make Friday’s payroll. If you’ve ever felt broke in a profitable month, this is the letter that explains it.

The textbooks call this gap the cash conversion cycle. I gave you the dictionary version of working capital a few letters back; today is the day the definition either clicks or quietly costs you a company someday. I’d rather it clicked.

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Revenue and profit may look good in a report, but only cash gives you the ability to pay people, make decisions, and survive long enough to win.

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FROM MY DESK

Shrinking the Middle

First, the contrarian part, and I need you to hear it: growth makes this worse. Every new job digs its hole before it fills it. Double your sales and you double the money you’ve buried in the middle, months before the checks catch up. This is precisely how profitable companies die growing: not from a lack of customers, but from a lack of cash to fund the gap their own success keeps digging. Revenue is vanity, profit is opinion, cash is survival. Now, the four levers, in the order I’d pull them.

Take deposits. Thirty to fifty percent before materials get ordered. Just ask. Most customers expect it, and the deposit does double duty: it funds the hole before you dig it, and it screens for character. The customer who fights hardest against a standard deposit at day one is auditioning for the role of your day-ninety problem. Believe the audition.

Invoice the same day. Not at month-end, batched with the rest, whenever the office gets to it. The day the work finishes, the invoice leaves. Every day between finishing and invoicing is an interest-free loan you volunteered to make, and the net-thirty clock doesn’t even start until the invoice arrives. Same-day invoicing costs nothing, requires nobody’s permission, and for many companies is worth more cash than a price increase. It’s the easiest money in this whole letter.

Negotiate terms in both directions. Here’s the reframe: in the gap, you are functioning as a bank, either lending or borrowing. So negotiate like one, on both ends. Ask your suppliers for forty-five day terms; the worst answer is no, and you’re a customer too, remember. Offer your customers fourteen day terms, with a small, honest nudge for paying early. Move each end fifteen days and you’ve cut a month out of the middle without selling one additional thing.

Bill by progress. If your work takes weeks or months, stop treating the job as one payday at the end. Deposit at signing, a draw at the milestone, balance at completion. The job funds itself as it goes, and you never again have three months of your money buried in someone else’s project. Industries from construction to software figured this out generations ago. Yours will not be offended.

Then measure the one number: days from the first dollar out to the last dollar in, per job, averaged. Not revenue, not margin, just days. Put it next to revenue in whatever you review monthly. Watch what happens to your decisions once the gap has a number on it. And here’s the enterprise value angle, because you knew there’d be one: buyers do this exact math. A company whose growth funds itself gets a premium. A company that eats cash as it grows gets a discount and a working capital adjustment at closing, which is a polite phrase for money coming out of your pocket at the wire. The middle is either your money or your buyer’s leverage.

I’ll be straight with you: this is the least glamorous letter I’ll send you this year, and it’s the one most likely to save your company someday. File it where you can find it on a scary Friday.

NEXT STEPS

Action is the Advantage

I do not write this newsletter to motivate you. I write it to move you.

So here is what I want you to do this week:

✓ Compute your gap on the last job you completed: the date money first left to the date the payment cleared. That number of days is your cycle. Write it down.

✓ Switch to same-day invoicing effective this week. Smallest change in this letter, fastest cash.

✓ Add a deposit line to your next three quotes. Watch how few customers blink...

✓ Reply with your number of days. I read every reply, and I’ll tell you whether your gap is normal for your kind of business or a quiet emergency, because those deserve very different next moves.

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