In the Cash Machine concept, the customer pays upfront for the products sold to the customer before the company is able to cover the associated expenses. This results in increased liquidity which can be used to amortise debt or to fund investments in other areas.
How they do it: Computer manufacturer Dell was one of the pioneers in employing a build-to-order strategy in the 1980s. Computers were first customized and paid for by the customers, with invoices for the computer parts from the suppliers having lenghier payment deadlines. This allowed it to achieve a highly negative cash conversion cycle. In its early years the Cash Machine pattern presented an important means for Dell to finance its growth. At its founding in 1984, Michael Dell’s seed capital consisted of a mere US $1,000.
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How they do it: Blacksock’s subscribers purchase and pay their sock subscription in advance, allowing the company to use the increased liquidity to finance other areas such as growth.
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How they do it: Netflix’ subscription customers pay their monthly fee upfront. This give the company increased liquidity to operate their business and acquire additional users.
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How they do it: Lufthansa flights are paid right away when they are booked, although the actual flight is in several days, weeks or months time. This allows the company to utilize the liquidity it gets from the prepayments and also finance their capital expensive operations (e.g. plane maitenance).
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How they do it: American Express developed the traveller’s cheque in 1891. It is a business model innovation based on the Cash Machine pattern. It emerged from the problem faced by American Express’ own employees who travelled abroad and had difficulty obtaining cash in a foreign country.
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Below, the top industries for the pattern "Cash Machine" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 5 firms using this pattern.
Below, the pattern "Cash Machine" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
