A company may raise selling prices during an inflationary period and still experience tighter liquidity. Rajeev Khandelwal’s background across business ownership and structured finance provides a useful perspective on that apparent contradiction. Replacement inventory costs more, suppliers may demand earlier payment and customers may take longer to settle. Nominal revenue growth can therefore conceal a deteriorating cash position.
Follow replacement costs
Historical margins do not necessarily show the cash needed to replenish stock. Goods purchased at an earlier price may generate an attractive accounting profit when sold, while replacing them consumes much of the proceeds. Management should compare selling prices with current procurement costs and the quantity of inventory required to maintain service. This gives a clearer view of the funding needed to sustain ordinary trading volumes.
Examine the pricing delay
Some businesses can adjust customer prices quickly; others operate under fixed contracts or lengthy negotiations. The delay determines how much cost pressure the company absorbs. A financing forecast should reflect that lag rather than assume immediate pass-through. The effect can be especially pronounced when imported inputs, transport and wages rise at different times, making one broad inflation assumption insufficient for the actual operating model.
Revisit facility size
A working-capital line sized for an earlier cost base may support fewer units of production after prices rise. The business can hit its borrowing limit without expanding physical output. This creates a practical reason to review facility capacity and cash buffers. The discussion should distinguish higher funding needs caused by inflation from those caused by additional sales, operational inefficiency or worsening customer collections.
Keep real activity visible
Rajeev’s financial advisory context and Credit Connect’s debt and trade offerings connect naturally with this issue. A useful financing conversation tracks units, prices and payment dates separately. That approach helps owners and lenders understand whether a larger revenue number represents genuine expansion or simply a more expensive operating cycle. Capital planning improves when the company explains what it must spend to maintain the business tomorrow.
