Maharaj looked satisfied.
“Tenali, sales are growing well. Customers are happy too.”
Tenali smiled.
“Excellent. Then profit must also be rising?”
Maharaj went silent.
“Not exactly…”
Tenali opened the numbers.
“Annual turnover?”
“₹12 crore.”
“Gross margin?”
“18%.”
“Cash discounts given?”
“₹24 lakh.”
Tenali paused.
“And how much did collections improve?”
Maharaj replied softly,
“Average payment cycle reduced from 75 days to 72 days.”
Tenali asked, “So the business sacrificed ₹24 lakh… to recover cash just 3 days earlier?”
Maharaj fell silent.
Tenali continued.
“Do all customers receive the same discount?”
“No.”
“Is there a written approval system?”
“No.”
“Do late-paying customers also get discounts?”
“…Yes.”
Tenali nodded.
“Maharaj, this is not a sales strategy.
This is uncontrolled profit leakage.”
He drew a simple conclusion using Customer Profitability Analysis.
“Not every customer deserves the same pricing behaviour.
Some customers increase volume.
Some increase profit.
And some only increase turnover while draining margins.”
Maharaj finally understood the hidden mistake.
Tenali smiled:
“Businesses rarely collapse because of visible losses.
They weaken because of small leakages repeated every day.”