Cash feels tight even when sales are strong
Look at receivables, stock, dispatch and supplier payments together.
01 · What is usually happening?
Orders are up and the factory is busy, yet the account is always low. The money is in stock, in work in progress and in invoices not yet paid, and no one has added it up.
Growth makes it worse, because every new order needs material and wages before it brings in cash.
The question people usually ask“Where is our cash?”
The more useful question“How much is tied up in receivables, stock and work in progress, and which of it can be released?”
02 · Common causes
- 01Customers pay later than suppliers must be paid
- 02Stock is bought ahead of need
- 03Finished goods wait for dispatch or a proof of delivery
- 04Overdue invoices are not chased in order of size
- 05Advances and credit terms are not matched to the cash cycle
- 06No forecast of cash for the next few weeks
03 · What to check now0 of 6 checked
04 · What good looks like
- 01The cash cycle in days is known and watched.
- 02Overdue receivables are chased by size and age.
- 03Stock is bought against likely use.
- 04Terms with customers and suppliers are reviewed.
- 05A four-week cash forecast is updated weekly.
05 · Where this connects
This rarely stays in one department
What it can lead to: A growing business runs short of cash exactly when it is busiest.
Start from a problem
Work flows left to right, top to bottomKEYMost important for manufacturing
These support every part of the business
Problem
Cash feels tight even when sales are strong
Usually connected to
How it spreads
- Finance
What it can lead to: A growing business runs short of cash exactly when it is busiest.
lamplamp could work out your cash cycle from invoices, stock and bills.
08 · lamp
lamp could keep this moving
lamp is not available yet. These are things it is being built to do.
- lamp could work out your cash cycle from invoices, stock and bills.
- lamp could show which of the three holds the most cash.
- lamp could list the customers to call first.
- lamp could forecast cash for the next four weeks.
Does your business handle this differently?Tell us what we have missed: a cause, a check, or a better way of handling it.
Suggest an addition