{"id":251,"date":"2026-05-27T21:47:49","date_gmt":"2026-05-28T04:47:49","guid":{"rendered":"https:\/\/scmwithsekharv.com\/?p=251"},"modified":"2026-05-27T21:47:50","modified_gmt":"2026-05-28T04:47:50","slug":"revenue-is-an-opinion-cash-is-a-fact","status":"publish","type":"post","link":"https:\/\/scmwithsekharv.com\/?p=251","title":{"rendered":"Revenue Is an Opinion. Cash Is a Fact."},"content":{"rendered":"\n

A real-life Supply Chain leadership perspective on why cash flow, receivables, and cash-to-cash cycle time are critical early warning indicators for business health.<\/p>\n\n\n\n

A company can report impressive growth and profitability, yet still face serious stress if cash does not flow into the business in time.<\/p>\n\n\n\n

One simple indicator I encourage managers to monitor is the relationship between Operating Cash Flow and Net Income. When the two move broadly in alignment, the quality of earnings is generally healthy. But when profits rise while cash flow begins to lag significantly, it should be treated as an early warning signal.<\/p>\n\n\n\n

Many years ago, during a Management Committee meeting of a multi-product company, I raised a concern regarding delayed payments to my Project Division for completed work executed for another division within the organization.<\/p>\n\n\n\n

The division in question was a recently launched Biotechnology business that was being celebrated internally for its rapid growth and profitability.<\/p>\n\n\n\n

However, beneath the encouraging revenue numbers lay a serious issue.<\/p>\n\n\n\n

Receivables had expanded sharply, and cash flow had come under pressure.<\/p>\n\n\n\n

The situation became significant enough that, as the Supply Chain and Project Head, I was deputed to another state to leverage my earlier relationship with the recently appointed Chief Secretary in order to facilitate the release of overdue project payments.<\/p>\n\n\n\n

That experience reinforced an important lesson for me:<\/p>\n\n\n\n

Revenue is an opinion. Cash is a fact.<\/strong><\/p>\n\n\n\n

Recently, I came across the reported financial difficulties of a fast-growing listed electronics manufacturing company facing a similar challenge.<\/p>\n\n\n\n

The company reportedly experienced negative Operating Cash Flow during the fiscal year. Inventory levels increased. Receivables increased even more sharply. Cash-to-Cash Cycle Time reportedly expanded from 87 days to 125 days.<\/p>\n\n\n\n

What makes the situation particularly interesting is that the problem did not arise primarily from manufacturing inefficiency.<\/p>\n\n\n\n

The challenge emerged in a supply-and-installation business segment where delays occurred not necessarily in supply, but in installation, customer readiness, and service execution.<\/p>\n\n\n\n

As a result, a division contributing a relatively modest share of total revenue reportedly accounted for a disproportionately large share of receivables.<\/p>\n\n\n\n

This highlights an important lesson for Supply Chain professionals.<\/p>\n\n\n\n

Operational performance cannot be viewed in isolation from cash flow consequences.<\/strong><\/p>\n\n\n\n

Supply Chain Managers must therefore closely monitor:<\/p>\n\n\n\n