Why Is Cash Always Tight Even Though Revenue Is Growing?
The P&L says the business is doing well. The bank balance says otherwise. This is one of the most common — and most misunderstood — problems in growing Indian businesses.
- Revenue is up year-on-year but the bank balance feels tighter, not better
- You're drawing on credit lines more often, or later in the month, than you used to
- Suppliers are paid late even though customers are paying roughly on time
- A "good quarter" on paper still means a stressful scramble to make payroll
Growth is usually funded by working capital before it shows up as profit in the bank. As revenue grows, receivables (what customers owe you) and inventory typically grow faster than payables (what you owe suppliers) — meaning more cash gets tied up in the business at exactly the moment growth makes you feel like you should have more of it. A business growing 30–40% year-on-year with a 60-day receivables cycle can need significantly more working capital than its existing bank facilities were ever sized for.
Beyond the obvious stress, tight cash flow forces bad decisions under pressure: expensive short-term borrowing, discounting to accelerate collections, delaying supplier payments (which damages terms and trust), and — most costly of all — turning down genuinely good growth opportunities because there's no cash cushion to fund them.
IBEAN's Cash Flow Assessment maps exactly where cash is getting tied up — receivables cycle, inventory levels, payment terms — and quantifies how much working capital the current growth rate actually requires. From there, a Virtual CFO engagement rebuilds the cash conversion cycle (collections discipline, inventory management, supplier terms) and, where genuinely needed, structures the right credit facility sized to the real growth plan.
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