Business
Stop Financing Your Customers With Money You Do Not Have
Your books say last quarter was profitable, yet your account is empty and you are borrowing to buy stock. The profit is real - it is just sitting inside other people's businesses.
Profit and cash are different things, and businesses die of the second while celebrating the first. If you deliver in January, pay your supplier in January, and collect in April, you have made yourself an unpaid lender for three months. Corporates run 30, 60 and 90 day payment cycles because they can, and small suppliers absorb that gap with loan apps, family borrowing and unpaid salaries.
Close the gap at three points. Deposits: 30 to 50 per cent before work begins, non-negotiable above a threshold you set. Milestones: on longer jobs, bill in stages tied to delivery, not at the end. Terms: put the payment window and the late-payment consequence in writing on the invoice, before the job, in ordinary polite language. Then track one number - the days between money leaving your hand and money returning to it. Above 45 days, growth is quietly making you poorer.
Asking for a deposit can feel like accusing a customer of dishonesty, especially with people who came through relationship or church. Reframe it as terms, not suspicion, and apply them to everybody, including your friends. Uniform rules are read as structure. Selective rules are read as insult.
In practice
A printing business in Ojota was turning over about ₦4m a month and still permanently overdrawn. The owner introduced a 50 per cent deposit on any job above ₦100,000 and stopped releasing finished work before the balance cleared. Two corporate clients pushed back, one left. Within four months he had stopped using loan apps charging about 10 per cent a month, and his cash position moved from roughly negative ₦600,000 to positive ₦900,000 on similar revenue.
You are not paid when you deliver. You are paid when the money lands.
Action step
Add a written deposit and payment-terms line to every invoice you send this week, starting with a 40 per cent deposit on any job above ₦100,000.