Latest / Cash Flow Conversations with Fexingo: Working Capital, Receivables, and Small Business Finance
Why Your Cash Is Trapped in Prepayments
Small business owners often assume paying vendors early is a sign of good faith or a way to secure better prices. But as Lucas and Luna explore in this episode, the real risk lies in the gap between when cash leaves your account and when you actually consume those goods or services. We break down the mechanics of prepaid expenses, how they distort your working capital ratios, and why treating prepayments like an investment can be a dangerous game for liquidity. Using a concrete example of a manufacturing firm that overcommitted to raw material deposits, we show how a simple shift in payment…
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