What to Do When Cash Is Tight This Month

When a business cannot cover every payment falling due this month, it needs a dated picture of cash before it needs a new sales target. A sale made today may be paid weeks later; a promised loan may not arrive at all. The first task is to identify what money is available, which outflows are committed, which receipts are dependable and when each will actually move. Then decide whom to contact and what actions buy time without creating a larger problem. This is short-term triage, not a substitute for fixing a business that routinely loses money.

Make a one-page cash list today

Use the available bank balance, not the balance plus unused credit. Put the next four weeks across the top of one sheet and record each expected receipt by customer, amount, date and confidence. Separate money already received from invoices due, and invoices due from hoped-for new sales. Write the due date of every committed outflow: payroll, rent, supplier invoices, loans, taxes, utilities and any deposits already promised to customers. Confirm amounts against bank transactions, contracts and notices. Note any payment that must be made before an expected receipt. A week-end total can conceal a Tuesday shortage followed by a Friday payment, so inspect the actual dates when cash is tight.

For each uncertain receipt, prepare a second line showing what happens if it is one or two weeks late. Do not use an unapproved loan, expected tax refund or potential new contract to close a confirmed gap. Set aside money that belongs to customers or is otherwise restricted. Do not assume that tax, payroll or other statutory payments can simply be delayed: deadlines and consequences vary by location. If you do not know which obligations have priority, contact a qualified local adviser immediately. Government small-business guidance lists repeated inability to pay ordinary expenses among the warning signs of financial trouble.

A one-page triage checklist

• Cash available now: reconcile bank accounts and identify any restricted or earmarked amounts.
• Receipts: list customer, amount, realistic arrival date and confidence; confirm outstanding invoices with the payer.
• Outflows: list supplier, employee, lender and authority payments with actual dates and contractual terms.
• Immediate gaps: calculate the balance immediately after each major payment, including a delayed-receipt scenario.
• Actions: name the person responsible for each call or decision and the date the action must occur.
• Follow-up: update the sheet daily while a gap remains, and record actual payments against the plan.

Keep the sheet small enough to use in a 20-minute daily review. A long annual budget will not tell you whether next Wednesday's commitments can be met. Share the dated version with the people who make spending decisions so they do not create new obligations based on an outdated balance. If several accounts or currencies are involved, make clear which money can legally and practically be used for each payment.

Prioritise actions with visible trade-offs

First, collect money already earned. Confirm that invoices were sent correctly, that the customer received them and that there is no unresolved dispute. Ask for a concrete payment date politely. An agreed part payment may help, but document the amount and dates; it does not erase the remainder. Second, postpone optional spending that has not been committed, such as a nonessential upgrade or an order for stock that is already plentiful. Distinguish a truly optional purchase from a necessary part needed to complete paid customer work.

Third, speak to a supplier or lender before a payment is due if the schedule may not be met. Ask what changes can be agreed in writing, what fees or interest apply and whether future supply will be affected. Do not silently miss a payment or promise a date that depends on an uncertain customer receipt. Fourth, consider whether a customer would reasonably agree to a deposit or milestone payment for future work, subject to the contract and local rules. Do not bill unearned work as if it had been completed. Borrowing may bridge a timing gap, but repayment and interest create future outflows. If the core operation repeatedly has negative contribution, more credit can worsen the problem.

A dated example

Assume a small repair shop has 4,000 currency units available on Monday. It owes 3,500 in wages on Thursday and 2,000 to a parts supplier the following Tuesday. A customer owes 3,000 due Friday, but has sometimes paid a week late. If the customer pays on time, cash after wages is 500, after Friday's receipt 3,500, and after Tuesday's supplier payment 1,500. If that receipt slips a week, cash after Tuesday's supplier payment would be minus 1,500. This is a timing problem even if the repair job itself was profitable. The figures are illustrative and do not represent a safe minimum balance for another business.

The owner verifies that the invoice is correct and contacts the customer to confirm the expected date. At the same time, the owner reviews whether the supplier will agree to a specific revised date, with written terms, and pauses an optional purchase. The owner must still plan for the possibility that the customer pays later than promised. A supplier extension that adds a fee or risks losing essential parts might be worse than another lawful option. If wages or legally required payments are at risk, the owner seeks local professional advice without waiting for a second missed date.

Look beyond the month

Once the immediate list is stable, extend it into a rolling 13-week forecast. Ask whether the same gap appears again next month. Separate delayed receipts from a pattern of jobs priced below their direct costs. A profitable business can face a one-off timing gap, while a structurally loss-making one needs changes to prices, costs, offer mix or capacity. A regular need to defer one bill to pay another is a warning, even if every individual negotiation succeeds. Record the cash effect of each intervention in the next forecast, including fees and repayments.

Avoid selling stock or equipment in a rush without checking whether it is required to fulfil existing orders. Avoid deep discounts aimed solely at immediate cash if they create work with poor contribution or harm future pricing. Avoid assuming every overdue invoice will be paid in full. If suppliers threaten to stop delivery, a lender accelerates repayment, payroll is at risk or the business may be unable to meet legal obligations, consult an accountant and qualified local insolvency or legal adviser promptly. Procedures and directors' duties differ by jurisdiction. The point of early advice is to preserve informed options.

Next step: make the four-week dated list today and find the first date on which available cash could fall below zero under a delayed-receipt scenario. Confirm one expected payment and one committed outflow, then update the list with the actual answers tomorrow.

Sources

• business.gov.au: Warning signs your business is in financial trouble. Guidance on identifying persistent financial strain.
• business.gov.au: Guide to managing cash flow. Guidance on monitoring receipts, outflows and financing trade-offs.