How do I manage cash flow to avoid shortfalls?

Practical cash flow management

Cash flow management keeps the business solvent. Focus on timing of inflows and outflows, forecasting, and operational levers to smooth variability.

Key tactics:

• Maintain a rolling 90-day cash forecast and update weekly.
• Accelerate receivables: invoice promptly and incentivize early payments.
• Stretch payables where reasonable without harming relationships.
• Build a cash reserve for unexpected expenses.
• Negotiate payment terms with vendors and customers.

Operational levers

1. Control discretionary spending (hiring, marketing) during tight months.
2. Use short-term financing (line of credit, invoice factoring) as a bridge.
3. Improve gross margins by adjusting pricing or reducing COGS.

Practical monitoring

Track cash conversion cycle (inventory, receivables, payables) and set alerts for low-cash thresholds. Run scenario analyses for slower sales or delayed payments.

Preventive mindset

Avoid last-minute scrambles by planning monthly. Transparent internal reporting helps leadership make timely trade-offs and maintain supplier and employee confidence.