A salon can be fully booked and still short of cash. The reason is arithmetic, not management failure: stock is paid for weeks before the appointments that consume it are served, and every growth step widens that gap before it closes.
1. Map the Three Dates
Write down the date you pay the supplier, the date material lands in your storeroom, and the average date it gets installed and paid for. The number of days between the first and last is your cash conversion cycle. Growth lengthens it; that is the entire problem.
2. Terms Are a Financing Tool
- Deposit plus balance: standard, and it front-loads your cash exposure.
- Balance against documents: shortens exposure slightly and ties release to shipping evidence.
- Repeat-account terms: the real goal. Negotiate 30-day terms after six clean orders rather than at the first order.
3. Sequence Growth Around Cash, Not Demand
Add a chair, add a service line or take on a second location in the order that your cash cycle can absorb. Demand will always arrive before the cash does; the discipline is choosing which demand to accept this quarter.
The Working Capital Reference Suite
Core materials for modelling stock depth against install revenue.
