Answer · A short answer
Why did a record revenue month leave less cash?
Because revenue is not cash, and growth costs money before it makes it. A record month often means more stock bought in advance, more ad spend, deeper discounts and more refunds. If the extra sales came from low-margin or often-returned products, the business can grow its top line and shrink its bank balance in the same month.
Where the cash goes
Look at what happens around a big month. You paid the manufacturer for stock weeks or months before it sold. You spent more on ads to drive the spike. Discounts brought buyers in at a lower price. Refunds from last month's orders went out. Fees rose with every order.
Each of those leaves before the sale's money arrives, or takes a cut of it. Revenue counts the order. The bank counts what is left, and when.
The product mix moved
Not every product leaves the same amount. If the record month was driven by a product that sells well but costs a lot to make, ship or replace, more orders can mean very little more money. Meanwhile slow products sit on the shelf with cash tied up in them.
Revenue by product hides this. Contribution by product shows it.
Every team was right
Marketing saw a strong ROAS. Finance saw tight cash. Operations saw a stockout coming. Support saw tickets about late orders. All of it was true at once, because each team measured its own part.
The fix is one model that follows each order from ad spend to what it leaves after every cost, and one weekly meeting where every team reads it together.
What to check first
Compare the month's contribution, not its revenue, with the month before. Then list the cash that left that was not part of an order: stock purchases, refunds and ad spend paid ahead. Then rank your products by contribution and see which ones the record month really sold.
Most brands find the answer in two places: stock bought for a spike, and a best seller that earns far less than it looks. Both are fixable once you can see them every week instead of once a quarter.
How one brand found where its record month's cash went. Read the brand's story.
Keep reading
- BreakdownRevenue up, cash down
- ToolWhen do you run out?
- TemplateWeekly commercial review
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