Sales are up. Why is cash still short?

Sales and cash receipts happen at different times. Credit terms, overdue invoices and inventory purchases can create a funding gap even when sales are profitable. A rolling cash forecast makes that gap visible.

Start with the payment terms

Imagine a supplier expects payment in 30 days while your customer pays in 60. You must fund the interval. This is an illustrative example, not a client result. Actual terms, deposits and operating costs change the size of the gap.

Separate due from expected

An invoice due next week is not confirmed cash. Review the customer's payment history, confirm the expected payment date and assign a person to follow up overdue invoices. Record uncertainty rather than treating every outstanding invoice as a reliable receipt.

Look at the stock

Inventory has already used cash. Identify slow-moving items and review demand, replenishment lead times and existing purchase commitments before placing another order. Cutting stock indiscriminately can create shortages, so examine items individually.

Build a rolling forecast

For each of the next four weeks, record opening cash, realistically timed receipts and payments due. Opening cash plus receipts minus payments gives expected closing cash. Carry that balance into the following week. Update the forecast weekly and use a longer horizon if your cash cycle requires it.

Make the next decision early

If a shortfall appears, follow up collections, review discretionary purchases and discuss payment timing with suppliers before changing agreed terms. Work with your accountant or finance adviser on financing and business-specific financial decisions.