Baca artikel ini dalam Bahasa Indonesia: 7 Strategi Ampuh untuk Memperbaiki Arus Kas Perusahaan (Bagian 1)
Plenty of companies that are profitable on paper still struggle to pay salaries, suppliers or taxes on time. The reason is almost always the same: profit and cash are not the same thing. A sale is booked as revenue, but the money has not reached the bank yet. Meanwhile supplier bills and running costs keep coming.
This series covers seven strategies you can put to work straight away to improve cash flow. Part 1 covers the first three: looking ahead at cash, collecting faster and scheduling payments. The other four are in Part 2.
Why a profitable company can run short of cash
The profit and loss statement records revenue when the sale happens, not when the money arrives. If customers pay 60 days after the invoice, the company has to fund two months of operations from its own cash. The faster a business grows, the more cash gets tied up in receivables and inventory.
That is why owners need to read three reports together: the profit and loss, the balance sheet and the cash flow statement. Profit tells you whether the business makes money. Cash flow tells you whether it can get through next month.
Strategy 1: Build a weekly 13-week cash forecast
A monthly cash flow statement only looks backwards. To make decisions you need to look ahead. A 13-week cash forecast, roughly one quarter, is simple and effective:
- Start with today's cash balance across all company bank accounts.
- Add expected receipts week by week, based on invoice due dates and how each customer actually pays, not just the date on the invoice.
- Add committed payments: payroll, rent, loan instalments, supplier bills and monthly tax obligations.
- Update it every week and compare forecast with actual. Gaps that keep repeating point to assumptions that need fixing.
With this forecast, a cash shortfall shows up weeks before it happens, while there is still time to collect sooner, delay purchases or arrange financing.
A forecast is only as good as the data behind it. If bank accounts are not reconciled and invoices are not fully recorded, the numbers cannot be trusted. In Xero, bank feeds and daily reconciliation keep the cash balance and receivables list current, and the short-term cash flow view helps you see your cash position a few weeks out.
Strategy 2: Collect receivables faster
Receivables are your cash sitting in your customers' bank accounts. Every day of delay is working capital locked up. The steps that usually make the biggest difference:
- Send the invoice the same day the goods ship or the work is done. Invoices sent late get paid late.
- Agree payment terms in writing before work starts, including deposits on large projects.
- Make sure invoices are complete and correct: the customer's PO number, a clear description, the bank account to pay into and supporting documents. An invoice that needs correcting goes back to the start of the queue.
- Send reminders consistently before and after the due date. Xero can send payment reminders automatically.
- Review the aged receivables report every week and follow up customers who are starting to slip, before the arrears pile up.
Track the result with days sales outstanding. When it falls, cash that was locked up comes back into the business without a single extra sale.
Strategy 3: Schedule your supplier payments
Paying suppliers on time keeps relationships healthy. Paying early for no reason, though, is the same as giving them a free loan. The aim is to pay on terms, not earlier and not later:
- Record every supplier bill as soon as it arrives, with its due date, so no obligation stays hidden.
- Run payments on one or two fixed days each week. Scheduled payment runs are easier to control and approve.
- Negotiate terms that match your collection terms. If customers pay in 45 days, 7-day terms with suppliers will always squeeze cash.
- Take early-payment discounts only when the discount is worth more than the cost of paying early.
The aged payables report and the list of bills coming due show exactly how much cash you need each week, and feed straight into the 13-week forecast from Strategy 1.
Coming up in Part 2
These three strategies help you see and steer the movement of cash. Part 2 covers the other four: controlling inventory, cutting fixed costs, building a cash reserve and choosing the right financing.
If your books are not yet tidy enough to support a cash forecast you can trust, Logiframe's accounting outsourcing team can clean up your bookkeeping in Xero and prepare your monthly reports.
Frequently asked questions
What is the difference between profit and cash flow?
Profit records revenue when a sale happens, while cash flow records the money that actually moves in and out of the bank. A company can be profitable and still run short of cash if customers pay slowly.
How often should a cash forecast be updated?
A 13-week cash forecast should be updated every week and compared with actual results, so the assumptions about receipts and payments keep improving.
How can a business get paid faster by customers?
Invoice on the same day, agree terms in writing, make sure invoices are complete, send reminders consistently and review aged receivables every week.