Profit is not cash
A profitable company can still run out of money if customers pay late or inventory ties up funds. Tracking cash separately is essential.
A weekly routine
- Update the bank balance every Monday.
- List invoices due in the next 30 days.
- List bills and payroll due in the same window.
- Forecast the lowest balance and plan around it.
Early warning signs
- Rising days sales outstanding.
- Frequent use of overdraft.
- Delaying supplier payments to cover payroll.
