Why am I profitable but always short of cash?

Because profit is recognized when you invoice, but cash arrives when customers pay — and growth widens that gap every month. Each increment of new revenue requires carrying its costs through your full cash conversion cycle before collections catch up. The condition is structural and common to virtually every growing company that sells on terms; the fix is capital structure, not cost-cutting.

How much working capital does growth actually consume?

Roughly: your daily cost of delivering revenue, multiplied by the days between paying costs and collecting cash, multiplied by the growth. A company adding $2.4M in annual revenue at 70 percent delivery cost with a 45-day gap carries roughly $200K of new permanent working capital. Your own numbers produce your own figure — and that figure is what the facility should be sized against.

Should I fund growth with debt or slow the growth down?

That is genuinely a strategic choice, and the honest answer depends on margin and durability. Growth whose contribution margin comfortably exceeds the cost of the capital that funds it is worth financing; growth that only works with free money is not. What we can do is make the comparison concrete — cost of the facility against margin of the growth — so the decision is made on numbers.

What if a bank already declined the line increase?

Bank limits are underwritten to historical financials, and fast growth outruns history by definition — the decline usually says your growth exceeded your track record, not that the business is weak. Collateral-based structures invert the logic: a borrowing-base or receivables facility sizes capacity from the assets growth is creating right now, and often coexists with the bank relationship rather than replacing it.

Is equity a better answer than debt for growth?

For funding a working-capital cycle, equity is usually the most expensive possible money — permanent dilution to solve a timing problem. Equity belongs in risks debt cannot carry: unproven products, long development cycles, losses. The working-capital gap created by profitable, contracted growth is exactly what non-dilutive structures exist for.

Use case

Growth working capital: for profitable companies that growth is squeezing dry.

Growing businesses spend first and collect later — every new contract, hire, and inventory build consumes cash months before it returns any. That squeeze is arithmetic, not mismanagement, and it has structural answers.

Reviewed by Ryan Hurley, Co-Founder & CEO

Growth working capital funds the gap growth itself creates: the period between paying for labor, inventory, and delivery and collecting the resulting revenue. The faster a company grows, the more cash that gap consumes — which is why profitable companies run short precisely when business is best. The durable fix is a facility that scales with the growth, not a fixed loan sized to last year.

Good fit

Growth you can already see

Signed contracts, a filling order book, demand outrunning capacity — need that is evidence-backed, not hoped for.

Tradeoff

Fixed facilities expire quickly

A loan sized to today’s revenue is undersized within quarters at real growth rates. Structure has to scale or it becomes the next constraint.

Review

The gap is measurable

Days of cash consumed per dollar of new revenue is a number, not a feeling. Knowing yours is the difference between structuring capital and guessing.

The arithmetic

Why the best year on paper is the tightest year in the bank.

Take a company that pays its costs in 15 days and collects revenue in 60. Every dollar of new monthly revenue means roughly 45 days of costs carried out of pocket — permanently, for as long as that revenue level holds. Grow by $200K a month in sales at 70 percent cost of delivery, and the balance sheet must absorb well over $200K of additional carried working capital before the growth pays for itself. The income statement calls that success; the bank account calls it a crisis.

This is the mechanism behind the phrase “growing broke,” and it has a name — the cash conversion cycle: days of inventory, plus days of receivables, minus days of payables. Every point of growth multiplies through it. Companies feel it most acutely at inflection moments: the largest contract in company history (a $4.8M facility for exactly that situation), a second location ($750K expansion capital), a step-up in headcount ahead of revenue, or a seasonal buy that dwarfs last year’s.

The reason this matters for structure: a need that grows with revenue cannot be solved by a fixed amount of money. It is solved by facilities whose capacity is built from the very assets growth creates — receivables and inventory.

Before the squeeze becomes the emergency

Bring the growth; we will bring the arithmetic.

With your payment terms, collection reality, and pipeline, the working-capital consumption of your growth plan is a calculable number. We run it with you and match the structure to it — while the choice is still strategic rather than urgent.

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Matching structure to growth

The instruments, in the order growth companies usually need them.

Receivables funding — capacity that scales automatically with billing, because the collateral is the billing. The natural first structure for B2B companies whose growth is customer-driven.
Asset-based lending — a borrowing base across receivables and inventory that grows as the balance sheet grows. The destination structure for companies past roughly $1M in working-capital assets.
Inventory financing — for growth that must be bought in advance: distributors, ecommerce brands, and manufacturers scaling stock ahead of demand.
Line of credit — the right general tool when the gap is moderate and the balance sheet supports the limit; the wrong one when growth keeps outrunning it.
PO financing — for the specific moment when one confirmed order exceeds what current capital can produce.
Term debt — for the durable investments growth requires (buildouts, equipment via equipment financing), keeping the revolving structures free for the cycle itself.

The common thread: fund recurring gaps with revolving structures and durable investments with term structures. Growth companies get into trouble by crossing those wires — term debt for a working-capital cycle, or worse, the operating account for a buildout.

Questions we are asked

Growth working capital, answered directly.

Why am I profitable but always short of cash?: Because profit is recognized when you invoice, but cash arrives when customers pay — and growth widens that gap every month. Each increment of new revenue requires carrying its costs through your full cash conversion cycle before collections catch up. The condition is structural and common to virtually every growing company that sells on terms; the fix is capital structure, not cost-cutting.
How much working capital does growth actually consume?: Roughly: your daily cost of delivering revenue, multiplied by the days between paying costs and collecting cash, multiplied by the growth. A company adding $2.4M in annual revenue at 70 percent delivery cost with a 45-day gap carries roughly $200K of new permanent working capital. Your own numbers produce your own figure — and that figure is what the facility should be sized against.
Should I fund growth with debt or slow the growth down?: That is genuinely a strategic choice, and the honest answer depends on margin and durability. Growth whose contribution margin comfortably exceeds the cost of the capital that funds it is worth financing; growth that only works with free money is not. What we can do is make the comparison concrete — cost of the facility against margin of the growth — so the decision is made on numbers.
What if a bank already declined the line increase?: Bank limits are underwritten to historical financials, and fast growth outruns history by definition — the decline usually says your growth exceeded your track record, not that the business is weak. Collateral-based structures invert the logic: a borrowing-base or receivables facility sizes capacity from the assets growth is creating right now, and often coexists with the bank relationship rather than replacing it.
Is equity a better answer than debt for growth?: For funding a working-capital cycle, equity is usually the most expensive possible money — permanent dilution to solve a timing problem. Equity belongs in risks debt cannot carry: unproven products, long development cycles, losses. The working-capital gap created by profitable, contracted growth is exactly what non-dilutive structures exist for.

Size the capital to the growth, before the growth forces the issue.

Payment terms, collection reality, pipeline — one conversation turns them into a facility plan.

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