cash-flow-management git:20260728.2d6d1c9A

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---
name: cash-flow-management
description: Manage the timing of money in and out so the business can pay what it owes when it is due. Use when growing fast, when payment terms are long, or whenever runway is under a year.
---

# Cash flow management

Profitable businesses fail from cash timing. Growth consumes cash before
it produces it: you pay for inventory, staff, and acquisition now and
collect later. Managing the gap is a distinct discipline from managing
profit.

## Method

1. **Forecast weekly, not monthly, when runway is short.** Monthly
   averages hide the week where payroll and a supplier payment coincide.
2. **Model the collection cycle honestly.** Use actual payment
   behaviour rather than stated terms, since customers pay when they pay
   (see payment-reconciliation).
3. **Watch the working capital cycle.** The time between paying for
   something and being paid for it is the cash the business must fund,
   and it grows with revenue.
4. **Negotiate terms in both directions.** Faster collection and slower
   payment each free cash, and the terms are often more negotiable than
   the price.
5. **Keep a buffer sized to volatility.** Enough to absorb a late
   payment from your largest customer, since concentration turns one
   delay into a crisis.
6. **Distinguish a timing problem from a viability problem.** Financing
   solves timing and worsens viability, and treating the second as the
   first is how businesses borrow into failure.
7. **Track runway continuously with a trigger.** A defined number of
   months at which you act, decided in advance rather than during the
   panic.

## Boundaries

Cash management buys time; it cannot fix a model that loses money per
unit (see unit-economics). Financing decisions have legal and personal
guarantee implications requiring advice. Tax and statutory payment
obligations are not flexible in the way supplier terms are.