The courier holds the cash

In April a small operator here reads a bank balance that belongs to two weeks ago.

The month was good. The orders went out, most of them cash on delivery, and the money is somewhere between a driver's pocket, a courier's settlement cycle and a remittance file that arrives when it arrives. Fourteen days, often twenty-one, longer on anything that had to be attempted twice.

So the founder opens the account on the first Saturday of the month, sees a number that does not match the month that produced it, and cuts the April budget.

That is the cost of the free thing. Cash on delivery is offered as a convenience with no price on it, and it is charged twice. Once in the failed deliveries and the refusals, which everybody counts, because those arrive as a percentage in a report. And once in the float, which nobody counts, because it never appears as a line anywhere. The business is lending its own revenue to a logistics company, at no interest, for two or three weeks, and the loan is at its largest in the month straight after it sells the most.

Which is the trap in it. The better the peak, the wider the gap between what the business earned and what the business can spend, and the cut lands precisely in the weeks when momentum is worth paying for.

The number that runs a cash business is not the balance. It is what the courier is still holding, and the date it lands. Anybody can find that out in an afternoon. Almost nobody asks before the budget meeting.