Key Takeaway: Before you borrow for one customer, put the length of the loan next to the length of their contract. If the loan runs longer, you carry the difference alone. Match the loan to the contract.
By Samer Azar
Dear reader,
A 2-year contract can sit on top of a 7-year loan, and the gap only shows up in year 3.
Say your biggest customer is half your order book and signs for 2 years. To serve them, you take a $5 million loan that runs 7. In year 3 they leave, and your sales fall by half or worse. The loan keeps asking for its money in years 3 to 7.
I put that exact business on one sheet in the new video.
Read the bottom, ask who paid
Every cash flow statement has 3 buckets. Operating is the cash the business brought in from customers. Investing is what it built or bought. Financing is the money that came in from lenders and shareholders, and what went back to them.
Most people read it top-down and stop at profit. Read it from the bottom up: start at financing, ask where the money came from, then whose promise pays it back.
Take Oracle's annual report. Operating brought in $32.0 billion. It spent $55.7 billion on data centres. The $23.7 billion gap was paid for with outside money.
Oracle's own annual report, last fiscal year.
So whose promise pays that back? Oracle has $638 billion of signed orders still to deliver, and S&P estimates about half of that is one customer. When half the promise has one name on it, every lender is betting on that name.
Then the buildings. Oracle's quarterly filing says it had $288 billion of additional lease commitments, substantially all for data centres.
They are not on its balance sheet yet, and the leases run 15 to 19 years. The OpenAI contract behind them is reported at $300 billion over about 5 years. That is the same mismatch as a 7-year loan on a 2-year contract, at Oracle's size.
This has happened before. In 2000, Lucent, which made equipment for America's phone networks, promised its customers up to $6.7 billion of credit so they could buy its gear.
It also set aside $250 million for customers who might not pay it back, so its sales were riding on its own promises.
Oracle does not lend to OpenAI, but the shape is close: the size of the build rests on one buyer's ability to keep paying.
What share of your sales sits with your biggest customer: under a quarter, a quarter to half, or over half? Reply with the band.
Name the customer behind the line
Find the biggest number in your operating section and write a customer's name next to it, with their percentage of your sales.
If you can't fill in the name, that is the finding. A number with no name behind it is a number you can't stress-test.
2 years of contract, 7 of loan
Here is the business from the video: $20 million in sales, a customer who is half your order book on a 2-year contract, and a $5 million loan over 7 years to serve them.
Put it on a sheet, year by year: operating, investing, financing.
Illustrative figures.
In years 1 and 2 the customer is paying. Now switch that customer off in year 3. Operating falls by half or worse. Financing still owes the bank every year until year 7.
That is 5 years of loan that nobody promised to pay, about $0.71 million of principal a year before interest.
THAT IS THE WHOLE PROBLEM.
1 rule before you borrow
Three moves for Monday:
Read your cash flow statement from the bottom up.
Put a name and a percentage next to your biggest operating number.
Line up each loan's end date with the contract's end date. Switch that customer off in year 3 and see whether the sheet still pays what you owe.
If the loan outlasts the contract, you have 2 ways out: shorten the loan, or sign a second customer before you borrow.
Match the loan to the contract.
If you'd rather have someone run this test on your numbers with you, apply for a strategy session.
One budget flow, every change signed
How we turned budget changes from email chains into one controlled flow with AI
Files from building the AI CFO. One set of numbers, every change decided by a named person.
A client's budget lived in several versions across several inboxes.
The controller, the CFO, the CEO and the COO all touched it, with a bookkeeping team behind them. Every change started a round of meetings and emails, and nobody could say who had approved what.
Here is how it works now. People read a view-only copy of the budget. To propose a change, they save a copy and edit that.
The system compares what they started from, what they changed and what the master holds today. It suggests approve, query or reject, with the rule number shown on the row.
The account manager decides. An approved value goes into the master only if the master still holds what the reviewer saw, and every step is logged and can be reversed.
How one budget change travels, from the source to the log.
AI wrote the code and the tests with us. It does not touch a number while the flow runs, and a person approves every change today.
We got one thing wrong first. Our first plan needed someone signed in to keep it alive, so we moved it to something that recovers on its own.
The 5 people involved now spend 80% less time on the budget update process.
Steal it:
Who writes: name the people who may write to the master budget.
What you reject: list 3 kinds of change you would reject without a conversation.
When you ask: set the size of move that makes you ask a question.
Which describes you best? One tap. It tells us what to send you.
Which describes you best?
Your spreadsheet is now Claude Code
Do not get intimidated. Do not put this off for later.
Know who the knocker-upper was? Before alarm clocks existed, there was a person whose job was to walk through town with a long stick, tapping on windows to wake people up for work. That job disappeared overnight when alarm clocks became cheap.
Spreadsheets are the long stick. Claude Code is the alarm clock.
Don't be a knocker-upper.
Reply with your band and I'll write back with the one thing I'd check before you sign anything longer than their contract.
Reply and let me know what's on your mind finance / AI / growth-wise.
Take care of your cash, and it takes care of almost everything else.
Samer
Next Saturday: another company's own filing, read for the one number you can use on Monday.
If you work in finance, you know a CFO who'd want this sheet. Forward it to them.
Not subscribed yet? Join the CFO Lab
Frequently asked
What is the bottom of a cash flow statement telling you?
The bottom is financing: money from lenders and shareholders, and what went back to them. Read it first and you see who paid for any gap between what the business brought in and what it spent. Then ask whose promise is meant to pay that money back.
What does customer concentration mean for a loan?
It means one customer's contract is what pays the loan. If that customer is half your order book and leaves, sales fall by half or worse while the loan payments stay the same. Lenders know this, so they ask who the customer is and how long they are committed.
How long should a loan be compared with a customer contract?
No longer than the contract that pays for it. In our example a 7-year loan sits on a 2-year contract, which leaves 5 years nobody promised to pay. If you need the longer loan, shorten it, or sign a second customer before you borrow.
How do you test what happens if your biggest customer leaves?
Put the business on one sheet by year: operating, investing, financing. Switch the customer off in year 3 and let operating fall by half or worse. Investing already happened, and financing still owes the bank. If the sheet can't pay what you owe, the loan is too long.
What is the first thing to check before borrowing for one customer?
Write the customer's name and their share of your sales next to your biggest operating number. Then line up the loan's end date with the contract's end date. If the loan outlasts the contract, change one of them before you sign.