A profitable credit sale can still be unfundable

A separate constructed customer cohort can be obtained only by granting 60 days’ credit. Without that offer, there is no sale to this cohort. Production is feasible within existing capacity; incremental material, labor and delivery payments total 80 now, with no other incremental cost or tax. Invoices total 100 at day 60, but a supported performance estimate gives expected receipts of 96 then. A qualified 1% effective return per 30 days applies to these expected receipts; the credit-loss allowance is already in 96.

The value increment is 96/1.01² − 80 = 14.11. The positive result supports the credit policy on those grounds, but the company has only 50 of cash available above its reserve. It must still obtain 30 by the production date. If the only available offer supplies 30 net now and requires 31 at day 60, that payment belongs in the funded account and its financing consequence must be priced consistently. If no obtainable finance or changed operating term supplies the 30, this sales opportunity is not presently executable.

Now expected receipts fall to 80 because the cohort’s payment behavior changes, with production cost and valuation basis otherwise unchanged. The increment becomes 80/1.01² − 80 = −1.58. A lower observed receivable balance caused by write-offs would not rescue this policy; the lost receipts change its economics.