The $700M Lesson From Henry Ford

Today at a glance:

• Henry Ford built a $700M cash war chest using smart payment terms.
• Dollar Shave Club, Costco, HelloFresh, and Tuft & Needle used this model to scale faster.
• Blue Apron and Casper didn’t—and paid the price.
• Faster payment terms = more cash turns = exponential advantage

Last week, I spent three days in North Carolina working with 150 year old American company. Amid all the whiteboard sessions and strategy work, one small detail jumped out at me:

They still collect payment upfront before shipping product to vendors.

This simple practice makes them wildly profitable and allows them to distribute massive dividends every year.

And they’re not alone.

In the early days of Ford Motor Company, Henry Ford sold cars to dealers upfront—collecting cash immediately. Meanwhile, he negotiated extended payment terms with suppliers. No banks. No loans. No venture capital. Just smart cash flow management.

When he was retiring and his children asked where all the company money was, Ford showed them that he kept $700M in cash in a vault at the office. He literally built an empire on payment terms.

And here’s the part I rarely see VC's talk about:

Companies that collect upfront but pay vendors on delay don’t just make more money—they turn cash faster.

Faster cash turns = faster growth.

Let’s break it down:

• Berkshire Hathaway built one of the most successful empires in history by mastering float. Their insurance companies collect premiums upfront and pay out claims much later. That float has funded decades of acquisitions—from GEICO to Dairy Queen to BNSF Railway.
• ‍Dollar Shave Club sold monthly subscriptions upfront. They paid suppliers on 30-60 day terms. That working capital float helped them fund viral growth without raising nearly as much capital as competitors.
• Costco collects billions in annual membership fees before selling a single product. That cash fuels their operations while vendors wait on Net 30 or Net 60.

Now compare this:

• Blue Apron raised over $100M in venture capital to cover logistics and inventory.
• HelloFresh negotiated aggressive payment terms with suppliers and used that float to fund growth. They went public with a healthier balance sheet.

And another one:

• Casper raised over $300M in venture capital, spent heavily on brand and retail, and burned through cash while paying suppliers upfront.
• Tuft & Needle bootstrapped their business, collected cash from customers before delivery, and negotiated terms with manufacturers—scaling profitably without venture money.

Let’s run the math:

Imagine Company A collects payment on Net 15. That means they receive cash every 15 days and can reinvest it quickly—effectively turning their capital ~24 times per year.

Company B collects on Net 45. They turn capital just ~8 times per year.

Over time, Company A can reinvest in inventory, marketing, or hiring three times more often than Company B.

Same product. Same market. But one grows faster, stays more liquid, and depends less on outside capital.

And it’s not just theory.

According to a global study by EY-Parthenon of over 5,000 public companies:

• Businesses with stronger cash management practices were 19% more resilient during economic shocks,
• 25% better at mitigating sudden impacts,
• And 21% more likely to avoid downturns altogether.

Better payment terms don’t just fuel growth—they build resilience.

Here’s the takeaway:

Most founders obsess over revenue or raising capital. But if you want to build a durable business, negotiate your payment terms like your survival depends on it.

Because it just might.

Playbook Move:

Audit your cash flow terms this week. Can you:

• Collect sooner?
• Pay later?
• Eliminate financing needs by managing the gap?

Small tweaks in payment terms can compound into millions.

Don’t leave that money on the table.