Profitable on Paper, Yet Short on Cash Why do Japanese manufacturers often report profits but struggle with cash flow? Long payment terms, Densai, and promissory notes can delay cash collection for 60 to 150 days, even after delivery and customer acceptance. A look at the key differences between Japanese and Western payment practices. Profit is an opinion. Cash is a fact.

Many companies rely on Gross Margin and SG&A, but fixed costs hidden in COS distort the true economics of the business. Correct decision‑making requires separating variable and fixed costs and viewing profitability through Contribution Margin and total fixed costs, not Gross Margin.