By Women Who Influence | The Influence
A full calendar can look like security. For a business that pays for materials or labor before customers pay, it can also create a demanding cash schedule. The work may be real and the sales may be growing while the money needed for the next obligation has not yet arrived.
Timing changes the picture
The SBA’s business-finance guidance distinguishes cash and accrual accounting. Under the cash method, income is recorded when payment is received; accrual accounting records it when earned. A sale and a bank deposit can therefore appear in different periods, depending on timing and accounting method.
Accounting choices have broader requirements that owners should discuss with a qualified professional. The practical point here is that reported revenue and available cash answer different questions.
Put expected receipts beside obligations
Our perspective: map the coming weeks using realistic receipt dates and known payment dates. Keep a confirmed customer payment separate from a proposal that has not been accepted. Note the assumptions behind uncertain dates so they can be updated.
Consider an illustrative project requiring supplies today, delivery next month and payment after acceptance. Even if the project is expected to earn a profit, the owner still needs to understand how the earlier costs will be met. A profitable forecast alone does not fill that timing gap.
Review the process behind late payments
Before assuming the only answer is more sales, examine invoicing and follow-up. Was the invoice sent to the correct person? Did it include the buyer’s required information? Is the payment date clear in the agreement? Administrative delays can become operating problems when nobody owns the follow-up.
A regular review should update expected receipts, upcoming obligations and unresolved questions. It should also identify when the owner needs accounting or financing guidance. Clearer timing gives a business more room to make deliberate decisions as demand changes.
Source: SBA, Manage your business: financial management and accounting methods. The project example and review approach are The Influence’s analysis, not individualized accounting or financial advice.
A cash-flow example you can copy
Hypothetical: A shop starts Monday with $4,000 in the bank. Payroll of $5,000 is due Friday. A $9,000 customer invoice is due the following Wednesday. Even if that customer pays on time, the shop is $1,000 short on Friday. Put each expected receipt and bill on its actual date, then flag the first week your running balance drops below zero. That gives you time to ask for a deposit on future jobs or adjust when you commit to expenses.
