Expert Workshop: Master Your Cash Flow to Drive Sustainable Business Growth
If you've ever felt that sinking feeling when you check your bank balance despite having "plenty of sales," you're not alone. Cash flow challenges are the number one reason businesses fail, not because they aren't profitable on paper, but because they run out of actual money to operate.
In this workshop, Michelle Scribner, CEO and CFO of Sum of All Numbers, broke down exactly how to master the art and science of cash flow management. This isn't about complex accounting formulas or expensive software. It's about understanding the fundamental rhythm of money moving through your business and making strategic decisions that keep you solvent, stable, and positioned for growth.
Why cash flow matters more than profit
Here's a reality that surprises many business owners: You can be profitable and still go out of business.
How? Because profit is an accounting concept that doesn't always reflect the actual cash sitting in your bank account. You might have: $50,000 in accounts receivable (money clients owe you but haven't paid yet) $30,000 in inventory (products you've purchaprofit and loss ssed but haven't sold) $20,000 in accounts payable (bills you owe but haven't paid yet)
Your tatement might show a healthy profit, but if you need to make payroll tomorrow and your checking account has $2,000 in it, you have a cash flow problem.
This is why cash flow management isn't optional. It's the lifeblood of your business operation.
Understanding the cash flow cycle
Cash flow is simply the movement of money in and out of your business over a specific period. But understanding the timing of that movement is where most business owners struggle.
The reality of revenue timing
When you make a sale, three things can happen: Immediate payment (retail, e-commerce, cash businesses) Delayed payment (invoiced services with NET 30/60 terms) Advance payment (deposits, retainers, subscriptions)
Each scenario creates a different cash flow reality. A consulting business that invoices clients with NET 30 terms might close $100,000 in sales in January but not see that cash until February or March. Meanwhile, rent, payroll, and software subscriptions still need to be paid in January.
The hidden cost of growth
Here's a counterintuitive truth: rapid growth can kill your business through cash flow starvation.
When you land a big project or new client, you often need to: Purchase materials or inventory upfront Pay contractors or employees to do the work Cover overhead costs during production Wait 30-90 days to actually get paid
This is called the "cash conversion cycle," and the faster you grow, the more cash you need to fund that growth. Many thriving businesses have collapsed because they couldn't finance the gap between spending and receiving payment.
The five pillars of cash flow management
1. Know your cash position daily
You don't need fancy software. You need discipline. Check your actual bank balance every single day, not your accounting software balance.
Action step: Set a recurring calendar reminder at the same time each day to log into your bank and record your balance. Track it in a simple spreadsheet with three columns: Date, Balance, and Notes.
This daily ritual creates awareness and helps you spot problems before they become crises.
2. Forecast your cash flow 90 days out
Cash flow forecasting doesn't require a crystal ball. It requires intentional planning based on what you already know.
Start with what you know for certain: Recurring subscription revenue Signed contracts with payment schedules Fixed expenses (rent, insurance, loan payments, payroll) Scheduled one-time expenses (annual software renewals, quarterly taxes)
Then add educated estimates: Average monthly revenue from variable sources Typical expense patterns based on historical data Seasonal adjustments if your business has predictable cycles
Create a simple forecast that shows week-by-week expected cash in and cash out for the next 12 weeks. Update it weekly as actual numbers come in and new information emerges.
3. Manage your receivables aggressively
Every dollar stuck in accounts receivable is a dollar you can't use to run your business. Yet many entrepreneurs are uncomfortable being "pushy" about collecting money they've earned.
Strategies that work: Invoice immediately when work is complete or milestones are hit Require deposits for large projects (50% upfront is standard in many industries) Offer early payment incentives (2% discount if paid within 10 days) Implement late payment fees and enforce them consistently Follow up promptly on overdue invoices (the day after they're late, not weeks later) Use automated reminders through your invoicing software Pick up the phone for invoices more than 15 days overdue
Remember: Your clients likely have their own cash flow challenges. The squeaky wheel gets paid first.
4. Extend your payables strategically (without damaging relationships)
While you want to collect money owed to you quickly, you can often extend the time before you pay others, within reason and without burning bridges.
Smart payables management: Use vendor payment terms when offered (NET 30 is free financing) Negotiate better terms with key suppliers as you build relationships Use credit cards strategically for the 30-day float (but pay them off monthly) Prioritize payments based on consequences (payroll and taxes first, vendors with flexible terms last) Communicate proactively if you'll be late on a payment rather than ghosting
The goal isn't to be a deadbeat. It's to align your cash outflows with your cash inflows intelligently.
5. Build cash reserves for stability
Cash reserves are your buffer against the inevitable ups and downs of business. They let you sleep at night and make decisions from a position of strength rather than desperation.
How much do you need? Minimum: One month of operating expenses Comfortable: Three months of operating expenses Ideal: Six months of operating expenses
Start small. If you can't imagine saving six months of expenses, start with $1,000. Then $5,000. Then one month. Progress compounds.
How to build reserves: Set aside a percentage of every payment received (even 5% adds up) Put windfalls in reserve (tax refunds, unexpected bonuses, one-time project premiums) Pay yourself second after reserves (this requires discipline but transforms businesses) Automate transfers to a separate high-yield savings account you don't touch
Common cash flow killers (and how to avoid them)
Killer #1: Seasonal revenue without seasonal spending
If your business has predictable seasonal fluctuations, your expenses need to flex accordingly, or you need reserves to cover the lean months.
Solution: Map out your revenue by month for the past 2-3 years. Identify your peak and valley months. During peak months, aggressively build reserves. During valley months, reduce variable expenses and draw from reserves as planned.
Killer #2: Hiring too soon
Adding employees or contractors feels like the solution to being overwhelmed, but it dramatically increases your fixed costs before the revenue to support them materializes.
Solution: Before hiring, ask: Do I have three months of their fully-loaded cost in reserves? Have I maximized my own productivity first? Could I outsource this on a project basis before committing to ongoing payroll? What will this person do when we have a slow month?
Killer #3: Inventory overinvestment
Product-based businesses can tie up enormous amounts of cash in inventory that sits on shelves or in warehouses.
Solution: Track your inventory turnover ratio (Cost of Goods Sold ÷ Average Inventory). Most businesses should turn inventory 4-12 times per year. If yours turns less frequently, you're tying up too much cash. Order smaller quantities more frequently, even if unit costs are slightly higher.
Killer #4: Underpricing your services
When your prices are too low, you need dramatically more volume to generate the same cash flow, which increases your expenses and operational complexity.
Solution: Calculate your true cost of delivery for every service or product (including your time). Add your desired profit margin. If that price feels uncomfortable, that's often a sign you're getting closer to appropriate pricing. Test incremental increases with new clients before raising prices across the board.
Killer #5: Lifestyle creep
As revenue increases, many entrepreneurs immediately increase their personal draws or business spending, leaving no buffer when revenue inevitably fluctuates.
Solution: Implement the Profit First system or a similar methodology where percentages of revenue are automatically allocated to reserves, taxes, profit, and operating expenses before you pay yourself. This forces you to live within sustainable parameters.
The cash flow dashboard you actually need
Forget complex software dashboards with 47 metrics. Focus on these five numbers, updated weekly:
Current cash balance (what's actually in the bank right now) Cash in next 30 days (deposits, receivables you're confident will be paid) Cash out next 30 days (payroll, rent, loan payments, vendor bills) Net cash position in 30 days (#1 + #2 - #3) Cash runway (how many months can you operate at current burn rate with current reserves)
If #4 is negative, you have 30 days to either collect more money, delay expenses, reduce spending, or arrange financing. Having that visibility transforms crisis into merely an urgent planning session.
When to consider financing options
Sometimes external financing makes strategic sense, but only when used intentionally, not desperately.
Good reasons to take on debt or financing: Purchasing equipment that will directly generate revenue Funding a specific growth opportunity with clear ROI Bridging a temporary gap when you have guaranteed receivables coming Taking advantage of a limited-time opportunity with measurable returns
Bad reasons to take on debt: Covering payroll because you don't have enough sales Funding general operations because expenses exceed revenue Buying things you "need" but can't afford Hoping things will get better without a specific plan
If you do pursue financing, understand: The true cost (APR, not just monthly payment) The full repayment term and total amount paid Whether there are prepayment penalties How daily or weekly payment schedules will affect your cash flow What happens if you can't make a payment
PayPal Working Capital, Square Loans, and similar products can have effective interest rates of 25-30% or higher. A traditional business line of credit or term loan from a bank will almost always be cheaper if you qualify.
Making cash flow management a habit
The difference between businesses that master cash flow and those that constantly struggle isn't sophistication. It's consistency.
Create these weekly rhythms:
Monday morning (15 minutes): Check bank balances across all accounts Review calendar for upcoming expenses Note any overdue receivables requiring follow-up
Friday afternoon (30 minutes): Update your 90-day cash flow forecast with actual numbers from the week Send any outstanding invoices Review upcoming week's planned expenses and confirm cash availability Transfer appropriate amounts to reserves if cash position is strong
Monthly (90 minutes): Reconcile all accounts Compare actual vs. forecasted cash flow Analyze what caused any major variances Adjust future forecast based on new information Review aging receivables and plan collection activities Evaluate whether reserve targets are being met
The mindset shift that changes everything
The single biggest obstacle to healthy cash flow isn't technical. It's psychological.
Many entrepreneurs resist cash flow management because it forces them to confront uncomfortable realities: Maybe the business isn't as profitable as they thought Maybe that new hire isn't affordable yet Maybe they need to have difficult conversations with slow-paying clients Maybe their pricing is too low Maybe they're spending on things that don't generate returns
But here's the truth: The problems exist whether you look at them or not. Looking at them just gives you the power to solve them.
Cash flow management isn't about restriction. It's about freedom. When you know exactly where you stand financially, you can make confident decisions about when to invest, when to pull back, when to take risks, and when to play it safe.
You stop making decisions based on fear and start making them based on data.
Your next steps
Cash flow mastery doesn't happen overnight, but it does happen through consistent, intentional practice.
This week: Check your bank balance and write it down List every expense you know is coming in the next 30 days List every payment you expect to receive in the next 30 days Calculate the gap and make a plan to address it if it's negative Set up your weekly review appointment with yourself and treat it as non-negotiable
This month: Create a simple cash flow forecast for the next 90 days Identify your three biggest cash flow risks and create mitigation plans Review your receivables and implement one new collection strategy Calculate how much you need in reserves to sleep well at night Start automatically transferring a small percentage of revenue to reserves
This quarter: Build a cash flow dashboard tracking your five key metrics Analyze seasonal patterns in your revenue and expenses Negotiate better payment terms with at least one major vendor Review your pricing to ensure it supports healthy cash flow Hit your first reserve milestone (even if it's just $1,000)
Remember: Every established, successful business you admire went through this same journey. The difference between businesses that make it and those that don't often comes down to this one discipline.
Your business can be profitable on paper and still fail. But a business with strong cash flow management has staying power, resilience, and the foundation for sustainable growth.