Working capital and inventory cash

Hardware companies typically pay deposits to manufacturers, pay for long-lead components, and hold inventory in transit and in warehouses before customers pay, sometimes with retailers paying on extended terms after that. The cash conversion cycle measures the gap: days of inventory plus days to collect from customers, minus days you take to pay suppliers.

Growth makes it worse, because each larger production run needs more cash up front. Profitable hardware companies can still run out of money.

Mitigations include pre-orders, better supplier terms, inventory or purchase-order financing, and avoiding oversized first runs driven by MOQs.