Cash Flow Crisis: Emergency Guide for Small Business Owners
Recognising a Cash Flow Crisis
You are in a cash flow crisis if any of these are true: You cannot make payroll this week, critical supplier payments are overdue, your bank account is consistently near zero, you are using personal funds for business expenses, or you have missed tax payments.
If any of these describe your situation, take a deep breath. Many successful businesses have navigated cash flow crises and emerged stronger. The key is taking decisive action NOW.
Immediate Actions (Next 24-48 Hours)
Step 1: Know Your Exact Position
- Current bank balance
- Cash coming in this week (confirmed, not hoped for)
- Cash going out this week (payroll, rent, critical payments)
- Gap = What you are short
Step 2: Triage Your Payments
Tier 1 - Pay These First: Payroll, HMRC (PAYE, VAT), critical suppliers, secured creditors. Tier 2 - Negotiate: Landlord, non-critical suppliers, professional fees. Tier 3 - Defer: Owner payments, nice-to-have expenses.
Step 3: Accelerate Cash In
- Call your top 5 overdue receivables personally
- Offer 5-10% discount for payment within 48 hours
- Accept partial payments - some cash is better than none
- Invoice any completed work immediately
Prevention: Never Again
Build Cash Reserves
Target 3-6 months of operating expenses. Set aside a fixed percentage of revenue (start with 5%), keep it in a separate account, and only touch for genuine emergencies.
Tools like Finley can automate this monitoring and alert you to developing problems before they become crises.
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