Sales are excellent. So where is the cash?

This is the question that comes up in developer meetings more than any other, and the answer is well known but rarely managed: sales convert into deferred paper, not cash.

The mechanics

Deposits run at 5% to 10%. Instalments extend to ten years. Revenue is not recognised until delivery. The result is that a developer is, in practice, operating as a finance company — carrying credit risk for years, while construction costs do not wait.

The gap that becomes a delivery delay

The distance between the collection curve and the cost curve is the origin of most distress and most delivery delay. It is not a market problem. It is a structuring problem, and it is visible long before it becomes a crisis — provided somebody is modelling cash at the project level rather than the company level.

What an assessor looks at first

The deferred-cheque portfolio against sold-but-undelivered units is, in substance, a delivery obligation set against deferred collection. It may not show clearly in the balance sheet. Any classification regime, any bank, and any serious investor looks at that gap before anything else.

Reported results reflect sales made three or four years ago, not current demand. A company can look profitable while running a liquidity gap — and the reverse.