After 20 years in banking and four years running Shadowfax, I’ve witnessed this scenario more times than I can count. A business owner calls, stressed and confused. Their company is growing rapidly. Sales are up 40% year-on-year. Profit margins are healthy. Customer satisfaction is high. The order book is fuller than it’s ever been. So why are they lying awake at night worrying about cash flow? Welcome to the growth paradox.
The Hidden Mathematics of Growth
Here’s what most business plans don’t account for: Growth consumes cash faster than it generates it.
Every new sale creates a chain reaction of cash outflows before a single pound arrives:
More inventory required → Cash tied up in stock Additional staff needed → Wages paid monthly, invoices paid quarterly Larger premises demanded → Deposits and fit-out costs upfront Enhanced systems essential → Software, equipment, and setup investments
Meanwhile, your new customers are paying on their standard 30, 60, or 90-day terms. The cash gap widens with every success.
I remember a client from my Yorkshire Bank days – a manufacturing business turning over £8 million annually. Excellent margins. Blue-chip customer base. Growing at 25% year-on-year.
They nearly collapsed because their growth was literally outpacing their ability to fund it.
The Success Trap Components
Working capital acceleration: As sales grow, the cash tied up in stock, work-in-progress, and outstanding invoices grows proportionally. A 30% increase in sales might demand a 40% increase in working capital.
Infrastructure lag: Growth often requires step-changes in capacity. You can’t hire half a person or rent half a warehouse. These investments happen in chunks, creating temporary cash flow holes.
Payment timing mismatch: Your suppliers and employees need paying weekly or monthly. Your customers are paying you when they feel like it. Growth amplifies this timing gap.
Management bandwidth drain: Growing businesses need their best people focused on operations, strategy, and customer service. Not chasing invoices and arranging emergency overdrafts.
The Current Market Reality
The pressure is intensifying. New UK payment legislation for 2026 mandates 60-day maximum payment periods and enhanced late payment penalties. While this should help, the interim period is creating uncertainty about customer payment behaviours.
73% of smaller businesses now report that faster payment options improve their cash flow management. The expectation for quicker transactions is rising across all business sizes.
Meanwhile, emergency borrowing costs remain significantly higher than planned facilities – typically 3-5% more annually on significant amounts.
The Strategic Solution Framework
The businesses that scale smoothly treat working capital as infrastructure, not an afterthought.
Plan ahead, not behind: Model your working capital needs 6-12 months in advance. Factor in seasonal variations, growth projections, and worst-case scenarios.
Arrange before you need: Establish asset-based lending facilities when you’re financially strong, not when you’re desperate. Lenders offer better terms to businesses approaching from a position of strength.
Decouple timing from customers: Invoice finance facilities provide 80-90% of invoice value within 24 hours. Your customers still pay on their normal terms – you’re just not waiting around for them.
Build relationships early: The best funding arrangements come from established relationships with specialist brokers and lenders who understand your business model and growth trajectory.
Beyond the Numbers
This isn’t just about cash flow mechanics. It’s about business psychology. When your cash flow timing is predictable, everything else becomes more strategic. You invest in opportunities rather than react to shortfalls. You negotiate from strength rather than desperation. You compound success instead of managing crises. Your best people focus on what they do best – growing the business – rather than managing cash flow firefighting.
The Competitive Advantage
Here’s what I’ve observed: Businesses with robust working capital infrastructure consistently outperform those without it. They invest in efficiency improvements while competitors are chasing invoices. They retain top talent while others are cutting costs. They capitalise on market opportunities while others are arranging emergency funding. The growth paradox becomes a growth advantage.
Your Next Move
If growth is creating cash flow stress in your business, that’s a strategic problem worth solving professionally. The cost of the growth paradox compounds daily. The benefit of solving it compounds even faster.
What’s your experience with growth-related cash flow challenges? Have you found effective solutions that others might benefit from? Ready to turn growth from a cash flow problem into a competitive advantage? Let’s have a confidential discussion about your working capital strategy. Call me on 0113 518 2253 or email me: hello@shadowfaxfunding.com
Andy Bissett is Founder & Director of Shadowfax Funding Solutions Limited, authorised and regulated by the Financial Conduct Authority. With nearly 25 years in commercial finance, he helps businesses navigate complex funding landscapes through strategic partnerships with major UK lenders