Most, if not all business owners, are struggling for certainty right now in a business world filled with chaos. The certainty I’m talking about finding is the certainty of knowing your cashflow numbers. Cashflow is the lifeblood of any business, and especially in a time of crisis.

Now is the time for entrepreneurs to lead.

You are the only one who can save your business, and clarity is at a premium right now. Instead of letting the chaos and uncertainty of today’s everyday life influence your business decision making, I would like you to consider slowing down.

Slow down and take the time and effort to clearly understand where your business is at today in terms of cash flow, and what that will look like over the next three months.

Once you have the certainty of clearly knowing your cash flow numbers then, and only then, make some hard decisions.  Let me show you the process to gain that clarity.

The pressure on you right now is coming from all different angles, sources and priorities. In order to deal with these competing priorities and emergencies, it’s critical you know the detailed, specific and current status of your lifeblood – it’s existing supply, new production capacity, and usage rate.

Now is the time, as in start right now, for gaining extreme clarity about your cash position and anticipated short-term cash forecast.

Gut feel, best guess, and “back of the napkin” generalizations are the enemy of clarity! It’s time to cozy up with the numbers of your business, become a bit of an accounting geek, and understand what is happening weekly, if not daily to your business.

Let me lead you through this process. It will take some time and effort on your part, but to me, you have no choice but to gain the insight and foresight this will provide. Today we are on a fact gathering mission.

We must understand where we are today before we can make decisions on what it will take to survive.

Tomorrow I will introduce you to a tool that will be essential to navigating the next few months- a “Rolling 13-Week Cash Forecast.”  Today is about insight, tomorrow is about foresight.

These are the questions we need answers to – how much cash do you have, how much cash will you need, when will you need it, and where is it going to come from.

Here are the critical key performance indicators (KPIs) and drivers you need clear optics on. You must know and be able to report on each of the following, with up-to-date accuracy, before we can move on to forecasting your near-term cash flow.

  • Your current cash position: How much is in the bank right now?

  • Liquid available cash resources: This means available room on lines of credit, revolving credit (credit cards), personal funds available to inject into the business (if necessary.   

  • Up-to-date accurate detailed Accounts Receivable (A/R) aging reports: If you are a business that invoices on terms, you must have a detailed understanding of who owes you, how much and when do they owe it.

    Then make notes on each- your insight into which ones can be collected quickly. Which ones need a call today to understand their intention of paying you in this crisis? What needs to be done to keep A/R current going forward?

    Are you working on any projects with customers that owe you now, and/or might be slow payers – should you keep expending your resources on those projects. As you study your A/R more insights will come up for you – perhaps certain customers that may not be as affected by what’s going whom you can approach for increased business.


  • Clarity into variable vs fixed expenses monthly: Look at a “cash basis” Profit & Loss statement for the last few months, broken down by month, and analyze each line item to understand if this is a fixed expense or a variable expense. Fixed expenses do not fluctuate with sales volume, such as rent, phone, utilities, admin wages. Variable expenses will increase or decrease with an increase or decrease in sales.

  • Up-to-date and accurate accounts payable (A/P) aging: You must have a handle on whom you owe, how much and when you owe it. We are trying to understand our cash flow for the next few weeks, and a clear understanding on your accounts payable is essential.

  • Now, as you work through points 4 and 5, think through any expenses or payments that could be extended or delayed. Loan payments, vendors currently on your A/P, even the rent. Rent abatements are happening in this environment. Side note – if you have an American Express balance coming due, call them, I have had clients have success in receiving a 30 day no interest or penalty extension.

  • Assets that can be liquidated for cash: Yes, drastic times may mean taking drastic measures. I guarantee you the frequency of business equipment auctions will increase in 2020. It may be something you need to consider.

  • The amount of the owner’s (that’s you) personal cash burn rate and the amount of that burn rate that can be curtailed to preserve cash for the business: Be a leader for your business and take a hard look at this. Start making moves on this, now.

  • Non-essential expenses: This is the expense fat in your business that can be curtailed or cut. These are the non-essentials given today’s environment. How has the definition of non-essential changed in your mind over the last two weeks? Make notes on this as you work through the fourth point above.

  • Projected revenue from operations assuming their current environment remains as is for 3,4, 6 or more months: Yes, don’t over optimistically project the end to this. It’s not official, but do you have any doubt we are in a recession? What will this do to your top line revenue. And if you are currently shut down, the top line is zero or close to it.

  • Expansion, growth or Cap X expenditures (capital expenditures, i.e. new equipment) that can be delayed or postponed

  • Sources of additional financing: Such as additional institutional (bank) financing, SBA disaster loan (go here ), or even family members, that rich Uncle who might be willing to support your business in these untried times.

I get it, this is not easy. This is time and effort. But in a time of contraction it is critical that you have the clarity of knowing your numbers. Tomorrow we will look at how you interpret all this information into a cash flow forecast for the next few months. And more importantly, how you use that tool to make near term decisions based in clarity, not chaos. 

“It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one link at a time.”

Winston S. Churchill