Cash keeps the lights on, the staff paid, and the weekend worry to a minimum. Still, plenty of profitable companies stall because the timing of money in never quite matches the timing of money out. Our finance team has seen a few heroic recoveries and a few preventable collapses, so we gathered six practical moves that bring welcome clarity to any cash-flow statement.
1. Plug short-term gaps with a flexible credit tool
Sometimes revenue likes to arrive fashionably late. When payroll, rent, or a supplier discount can’t wait, a revolving credit facility is the adult version of spare change in the sofa cushions. A well-structured business line of credit loans arrangement offers exactly that: quick draws, interest only on what you use, and freedom to repay once cash hits the account. Use it as a buffer, not a crutch, and review the terms at least annually to be sure your rate still makes sense.
2. Forecast cash like a meteorologist—minus the folklore
Your financial forecast deserves more than last year’s spreadsheet copy-pasted forward with a shrug. Build a rolling 13-week model that shows daily inflows and outflows, then update it every Friday. Include tax payments, subscription renewals, and that vendor who never invoices when expected. The exercise sounds tedious until you spot a storm three weeks out and sidestep it before anyone else notices.
3. Invoice faster than you spend
Sales are lovely; invoices are essential. Automate billing the moment a deliverable hits “complete,” not once a month after coffee. Shorter invoice cycles pull cash forward without the awkwardness of tightening payment terms. Offer electronic payment links so clients can settle up during their afternoon lull rather than hunting for a checkbook they last saw during the Clinton administration.
4. Turn fixed costs into variable ones where practical
Leases, salaries, and long-term contracts gobble cash whether revenue sings or sulks. Review each cost and ask whether a usage-based alternative exists. Cloud software can replace on-prem servers, part-time specialists can trim payroll, and short-term equipment rentals beat buying gear that spends 90 percent of its life napping. Variable expenses rise and fall with revenue, making low seasons less painful.
5. Treat inventory like produce, not fine wine
Inventory that sits too long quietly drains working capital. Track turnover by SKU, clear slow movers with modest discounts, and renegotiate minimum order quantities. If carrying safety stock feels non-negotiable, explore vendor-managed inventory or consignment agreements so the goods remain technically theirs until you scan a barcode. Storage space should house only what’s earning its keep.
6. Build a reserve before you need one
Cash reserves lack glamour, yet they protect growth plans from sudden detours. Start with one month of operating expenses in an interest-bearing account and grow toward three. Set an automatic transfer that sweeps a small percentage of each deposit into the reserve, then celebrate the days you never need to touch it. Investors and lenders sleep better when they see that cushion, and so will your payroll software.
A clear view of cash is less about heroic accounting tricks and more about steady, occasionally unexciting habits that compound over time. Use credit lines wisely, forecast meticulously, invoice without delay, question every fixed cost, keep inventory nimble, and stash a rainy-day fund. Do those six consistently and the next unexpected bill becomes a mild inconvenience rather than a full-blown crisis.