PPC accelerates demand, which can paradoxically drain cash if the cycle is not balanced. Faster growth increases inventory and receivable needs before cash returns. This is how success becomes a problem.

The Working Capital Cycle

The cycle is physical and temporal: Cash flows out for inventory, then ads, then eventually flows back as sales settle.

The Cycle Stages

1. Cash Out (Stock): Pay for inventory weeks or months before sale

2. Stock Holding: Inventory sits waiting for demand

3. PPC Spend: Ads create demand spike (cash out immediately)

4. Sales Event: Conversion happens

5. Receivables: Payment gateways hold funds 3-7 days

6. Cash In: Money arrives, cycle can restart

PPC Acceleration Effect

PPC changes the cadence and size of this cycle. We spend immediately on ads, but revenue lags through processors and wholesale terms.

Demand Spike

PPC creates instant demand. Orders increase immediately. Cash needs spike before revenue settles.

Inventory Pressure

Faster sales require faster restocking. Stock orders grow before sales cash arrives.

Receivables Lag

Revenue is earned but not received. Payment processors and returns windows delay cash.

The Scaling Trap

Growth breaks the bank: a business can grow broke by scaling into a cash deficit.

"Scaling spend often drains cash faster than sales replenish it. This is the trap."

The irony: the business is succeeding by every platform metric while running out of money. ROAS looks great. Cash runway shrinks.

Liquidity Is King

CFOs pause "profitable" ads if they cannot fund the stock replacement cycle. Liquidity trumps ROAS every time.

When CFOs Cut "Successful" Campaigns

A campaign with excellent ROAS gets paused because cash runway is shorter than payback period. The finance team is not wrong. They are protecting survival while the agency protects metrics.

Agency as Liquidity Partner

We must act as liquidity partners, not just traffic drivers:

• Align scale with financing capacity
• Pulse spend with inbound stock
• Never push "record days" if the client is cash-poor
• Monitor payback periods, not just ROAS

Practical Rules

Know the runway: Do not scale beyond what cash can fund
Match spending to inflows: Heavier spend after gateway releases
Prioritise fast-turn SKUs: Products that convert cash quickly
Cap daily exposure: Limit maximum cash outflow per day
Communicate with finance: Share payback data, not just ROAS

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