Your business is profitable. Why is cash still tight?

Trace the timing of a sale

Follow the cash from buying inputs to collecting payment. Include production, delivery, invoicing, and the customer’s actual payment behaviour. A contract’s payment terms are a starting assumption; they are not proof that cash will arrive on that date.

Growth can widen this gap. More sales may require extra stock, wages, or delivery spending before the related receipts arrive. Look at the cash needed to fulfil orders as well as the margin they are expected to earn.

Look beyond the profit figure

• Unpaid customer invoices can leave income in the accounts without cash in the bank.
• Stock purchases can use cash before those goods are sold.
• Equipment purchases and loan principal payments affect cash differently from operating expenses.
• Customer deposits and grant receipts may come with obligations or restrictions.

Separate unrestricted cash from money committed to a particular purpose. Also check payment-processor settlements, mobile-money balances, and transfers between accounts where these form part of your operations.

Build a weekly view

Begin with reconciled cash available at the start of the period. Schedule expected receipts and payments for the next 13 weeks using likely cash dates. Separate operating activity from financing and investment, so new borrowing does not hide an operating cash gap.

Show currencies consistently. A simple single-currency forecast needs translated amounts and stated exchange-rate assumptions; a multi-currency business may need separate schedules. Include bank charges and conversion costs where relevant.

Review assumptions and decide what to do

Compare the completed week with actual cash movements. Explain differences, refresh the remaining weeks, and add a new week at the end. Consider a slower-collections case rather than relying only on the preferred plan.

• Which receipts need follow-up, and who owns that action?
• Which payments are committed, and which can be rescheduled by agreement?
• What happens if a major customer or grant payment arrives later?
• Does planned growth need additional working capital?

Download the 13-week cash-flow template↗ to start with a simple structure.