Manage cash timing and liquidity

Direct answer

For this review, start with cash flow as timing, not just profit, then recommend a weekly 13-week cash forecast.

Why this question comes up

Owners can be profitable on paper but still anxious about payroll, taxes, slow payers, and timing gaps. This guide turns that concern into a review that can be repeated with a defined period, consistent inputs, and a visible trail back to the records.

Records to gather

• Daily or weekly cash balances by account
• A/R aging with observed collection behaviour by customer
• A/P aging with due dates and available terms
• Payroll and tax calendars with exact dates
• Credit facility terms, drawn balance, and covenant tests
• Any restricted cash, deposits, or reserves that are not actually available

Review workflow

1. Distinguish liquidity from solvency. A business can be solvent — assets exceed liabilities — and still fail to make payroll. Timing, not net worth, is what this review is about.
2. Identify the true available balance. Deduct restricted cash, security deposits, and any reserve requirement. Headline balance and usable balance are often materially different.
3. Map inflows and outflows to dates, not months. A month that nets positive can contain a week that does not clear.
4. Rank outflows by consequence. Payroll and tax carry penalties and legal exposure. Some supplier terms carry only a relationship cost. That ranking determines what moves in a squeeze.
5. Know your levers and their lead times. Drawing a facility, accelerating collections, and extending payables all take time. Knowing each lever’s lead time tells you how early you must act.
6. Test the covenant, not just the balance. A minimum-balance or coverage covenant can bind well before cash reaches zero.

What a useful answer should include

• Available cash after restricted amounts, stated as of a date
• Inflows and outflows placed on actual dates through the horizon
• The lowest projected balance and the date it occurs
• Outflows ranked by consequence of delay
• Available levers with their lead times
• Any covenant threshold and the projected headroom against it

Common failure modes

• Managing to the month. Monthly net-positive hides the week that breaks.
• Counting restricted cash as available. Deposits and reserves are on the balance sheet but cannot be spent.
• Using invoice terms for collections. Observed behaviour is the only reliable input; terms are aspirational.
• Discovering a lever too late. A facility that takes three weeks to draw is not a solution to a problem discovered on Friday.
• Watching the balance but not the covenant. Breaching a covenant can trigger consequences long before the account empties.

Community context

The linked community posts show why people search for this topic and which parts create confusion in practice. They are anecdotal. Use the reference sources and your organization’s policies for accounting treatment, tax, compliance, and final decisions.