Your sales are growing. Where is the cash?

Profit becomes usable cash only when receipts arrive in time to cover the payments the business must make.

The sales report looks healthy, but the account balance cannot cover the next supplier payment. Start by separating three things: work sold, profit earned and money received. They describe different parts of the business. A sale recorded today may not produce cash for several weeks, while the costs of delivering it may need paying immediately.

A cash problem is therefore a question about timing as well as value. The first useful response is a dated view of receipts and payments. Another sales target, a general instruction to reduce costs or a larger overdraft may miss the reason the pressure keeps returning.

Follow one transaction all the way through

Choose a recent ordinary order. Record when it was agreed, when stock or materials were paid for, when the work was completed, when the invoice was sent and when the customer actually paid. Do not use the contractual payment date if the customer usually behaves differently. The purpose is to see the sequence that the business is financing.

Imagine a fictional order worth ₦1,000,000. Materials cost ₦550,000 and delivery costs ₦50,000. The customer will pay after delivery. Before considering other costs, the order has ₦400,000 of contribution, but it may require ₦600,000 of cash before the receipt arrives. Contribution is useful; it is not money already in the bank.

Now imagine accepting several similar orders together. The business can look busier and more profitable while the cash gap widens. That does not prove growth is wrong. It shows that the terms and timing of growth need attention.

Build a weekly view rather than a hopeful total

Start with cash that is genuinely available. Add expected receipts in the weeks when they are likely to arrive. Subtract payments in the weeks when they must be made. Carry each closing balance into the following week. Keep customer receipts separate from borrowing, owner contributions and asset sales so the source of money remains visible.

A thirteen week view is a practical planning window, not a magic number. It is long enough to expose several payment cycles and short enough for the assumptions to be discussed. Use a shorter window if immediate survival requires daily attention, or extend it for seasonal commitments. The right horizon serves the decision.

Mark every amount as confirmed, expected or uncertain. A signed invoice is evidence that a customer owes money; it is not proof that the payment will arrive on Tuesday. Where a large receipt is uncertain, show a second scenario with that receipt delayed. Avoid hiding uncertainty inside one confident looking total.

Look for the recurring gap

A single late payment and a structurally weak payment cycle need different responses. Review whether invoices are issued promptly, whether required documents are complete, whether disputes remain unresolved and whether staff know who follows up each account. A customer may be willing to pay while the business itself has delayed the paperwork.

Then examine supplier commitments, stock purchases, payroll, loan repayments and owner withdrawals. Do not combine them into a vague expenses line. A machine purchase is a different decision from paying for materials already used. A loan receipt can temporarily improve the balance while creating future repayment pressure.

A cash forecast becomes useful when somebody is responsible for the assumptions, not when the spreadsheet has more colours.

Change one assumption and see the consequence

Test specific choices. What happens if invoices go out on the day work is accepted? What happens if a deposit covers materials? What happens if a planned purchase moves by a week? What happens if the largest customer pays late? Each scenario should change an identifiable input, not an unexplained percentage applied to the whole business.

Some changes have commercial costs. A stricter payment term may affect demand. A smaller stock holding may affect service. A delayed supplier payment may damage trust. Put those consequences beside the cash benefit before deciding. The cheapest looking action is not always the strongest business decision.

Make the forecast a management conversation

Review the opening balance, the next two weeks of commitments and changes in major receipts at a regular short meeting. Ask which assumptions changed and why. Assign an owner and a date to collection actions, disputed invoices and spending decisions. Record what actually happened so the next forecast improves.

Keep the distinction between education and accounting advice clear. This simple method does not determine the correct accounting or tax treatment of a transaction. It helps the owner see timing and ask better questions of the person responsible for the accounts.

What should a weekly cash review show?

A useful cash review starts with a bank balance that has been reconciled, then looks forward to dated receipts and payments. Keep a separate line for each important customer receipt rather than combining everything into expected sales. Record why the collection date is credible. An invoice due on Friday is different from a customer who has confirmed that payment is being processed, and both differ from money already cleared. The point is to make uncertainty visible early enough to act on it.

Group payments by the decision they require. Some are already committed and have clear due dates. Others are proposed purchases that can still be adjusted. Do not quietly treat a committed payment as optional because the forecast looks uncomfortable. If the business needs different terms, that requires a conversation and agreement. The forecast should represent the actual position before management chooses a response, otherwise it becomes a document that conceals the very problem it was supposed to expose.

How do you investigate a collection delay?

Follow one delayed invoice from the original agreement to the current conversation. Check whether the service or goods were accepted, whether the invoice contained the required information and whether a dispute remains unresolved. Identify the person responsible for the next step on each side. Repeatedly sending reminders may achieve little if the customer is waiting for a delivery document that nobody has supplied. The collection problem may sit inside the operating process rather than the finance department alone.

Separate the amount overdue from the reason it is overdue. A customer with a temporary payment delay needs a different response from an invoice issued incorrectly or work that did not meet the agreement. Keep promises made during collection discussions in the same working record. That gives the next review something concrete to check and prevents each conversation from beginning again as though no earlier commitment existed. Use anonymous summaries when discussing patterns outside the authorised team.

Which improvement should the owner check first?

Choose a change that affects a real cash date. Correcting an invoice, agreeing a deposit for new work or reducing unnecessary stock can be more useful than improving the appearance of a monthly report. Estimate the effect, assign an owner and check whether money actually moved as expected. The forecast should then be updated from the evidence. A revised assumption is not a receipt, and a promised cost reduction is not cash saved until the payment requirement changes.

Before your next significant spending promise, write down the next thirteen weeks of receipts and payments. Circle the lowest projected balance. That is the point the next decision needs to address.