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Independent machine intelligence · Research before the decision
THE MACHINEBLUE BOOKResearch · Market · Ownership
MBB Explains · Film 09

Keep Enough Cash to Run the Machine

A magnificent spindle cannot pay Friday’s wages by looking impressive.

Open the machine financing resourcesMore MBB Explains films
MBB Explains · 56.2 secondsOriginal MBB animation · English captions

About this film

A magnificent spindle cannot pay Friday’s wages by looking impressive.

Bronto explains working capital, the cash gap and why a profitable job can still arrive before the money does.

Example assumptions

Working capital = current assets minus current liabilities. Positive working capital need not mean available cash. The timing diagram is illustrative, not all manufacturers’ collection terms.

Educational boundary

General educational information only, not an offer of financing, a recommendation to borrow, or individual financial, tax, legal, engineering or safety advice. All dollar amounts are USD. Bob, the finance representative and their situations are fictional. Numerical examples are hypothetical, not current offers, market benchmarks, normal rates, quotes or promises of approval or return. Eligibility, terms, fees, tax treatment, ownership rights and laws depend on the actual agreement, jurisdiction and circumstances. MBB is an independent information resource, not a law firm, and is not acting as your lender, broker, attorney, accountant, financial adviser or site engineer. Consult appropriately qualified professionals and read the actual written terms before deciding. Commercial equipment credit does not automatically receive consumer mortgage protections.

An MBB Explains short, narrated by Bronto. Fictional illustrations turn machinery questions into something a little easier to understand.

Independent machinery knowledge. Understand the numbers before deciding.

Original MBB animation with synthetic Bronto narration. Narration: synthetic Bronto voice. The film uses English captions as a separate track, so they can be turned off.

Read the complete transcript

Bob has bought a marvellous machine. He now lacks the money to run it. This is rather like acquiring a racehorse and budgeting nothing whatsoever for oats. Working capital is current assets minus current liabilities. For day to day survival, also watch cash timing: when bills fall due and when customers actually pay. Materials and wages often leave before the customer’s money arrives. A profitable order can therefore create a cash squeeze while everyone waits for the invoice to be paid. A cash forecast exposes startup spending, late receipts and reserves. Financing may preserve cash today, but repayments join the queue of bills. They have not disappeared. Your magnificent spindle cannot pay Friday’s wages by looking impressive. Start with Machine Blue Book. General education, not individual advice.