Completing the flow cycle in situations where sales are differed

In the brilliant chapter “Accounting F®iction” you highlight that in TF we consider the flow cycle to finish once cash is collected.

This is great as no business is in merely for the software (or for the produce) but mainly to monetize their efforts. What is not clear to my eyes is how do you consider such a cycle when the impact of something you work on will take time to be bought from the market?

Consider an experimental project aimed at consumers. First you want to gauge interest, and you do. Then you start shipping MVPs (or MOVEs :stuck_out_tongue:) releasing new features that target the interest earned in the first step. Cash might not come in on your first shipment, as many might start using the freemium version or maybe usage might need to ramp up.

Would that require you to revisit your model, or would it be treated as an expected reaction of the market to your innovative product?

Not easy to generalize.

If you’re a startup, look at Lean Startup which has deep connections to TOC, and especially how you scale and gain traction. You consider the company as a “customer factory” and you want to measure throughput first in terms of new customers/day. Once you have established traction, you can shift to the more conventional financial throughput ($/day).

If you’re an established company, there are more sophisticated Throughput Accounting models that can be applied for service companies, subscription based business models, support driven organizations, and more.

The model is always the same: maximize Financial Flow. But how you get there might vary according to context.

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