Dude, where's my cash? How to grow your business without running out of money

Your business is growing. You have more revenue, more customers, and your team has never been busier. On paper, you’re doing great. Then you check the bank account, and it tells a very different story.

If that sounds familiar, you’re not alone. In my years working in audit and business advisory, I’ve seen it again and again: a successful, growing business that suddenly can’t pay its bills. The cause usually isn’t a lack of sales. It’s that growth eats cash in the short run.

In this post I’ll show you why that happens, using a real (anonymised) client, and then give you a practical plan to make sure it doesn’t happen to you.

Meet Bill

Bill runs a commercial cleaning and facilities company. Business was steady at about £50,000 of work a month. Then he won a run of new contracts, including one with a national retailer.

Over six months his monthly sales more than doubled, from £50,000 to £120,000. His profit went up every single month.

Here’s how it played out. (Names and figures have been changed to protect client confidentiality.)

Month	Work done (sales)	Profit	Cash in	Cash out	Bank balance at month end
Start					£40,000
January	£50,000	£4,500	£50,000	£45,500	£44,500
February	£60,000	£7,000	£50,000	£53,000	£41,500
March	£75,000	£10,750	£50,000	£64,250	£27,250
April	£90,000	£14,500	£60,000	£75,500	£11,750
May	£105,000	£18,250	£75,000	£86,750	£0
June	£120,000	£22,000	£90,000	£98,000	–£8,000

Bill made £77,000 of profit in six months, and ended up overdrawn.

How? Bill paid his staff and suppliers in the month the work was done, but his customers paid him around 60 days later. So every month, he was paying for this month’s (bigger) workload with the cash from two months ago’s (smaller) workload.

By June, his customers owed him £225,000, up from £100,000 in January. That extra £125,000 sitting in unpaid invoices is more than his entire £77,000 profit. The profit was real. It just wasn’t in his bank account.

Then it got worse. In June, the national retailer paid its £30,000 April invoice a month late. Bill’s balance dropped to –£38,000. To get through, he delayed paying his own cleaning-supplies wholesaler, who then had to stretch their own suppliers.

Bill’s story shows the four main causes of cashflow problems in growing businesses.

Why growing businesses run out of cash

1. Timing: you pay first, you get paid later

This is the heart of it. When you grow, you take on more staff, buy more materials and do more work before customers pay for it. The faster you grow, and the longer your customers take to pay, the bigger the gap you have to fund yourself.

It’s worse if most of your costs are paid up front, like wages, materials and rent. Unless you have a large cash buffer, rapid growth will drain it.

2. Payment terms: small businesses rarely catch a break

Small and medium-sized businesses tend to get squeezed from both directions:

Big clients with deep pockets know they have more bargaining power than their suppliers, so many are comfortable paying late or insisting on long payment terms.
Small clients without deep pockets often can’t pay promptly, even when they want to.

Either way, you do the costly work, send the invoice, and wait.

3. Cashflow problems are contagious

When a customer pays you late, you’re more likely to pay your own suppliers late, and they in turn pay theirs late. Research on supply chains shows that businesses short of credit that are hit by a cash shock pass a substantial part of it on to their suppliers. In some cases, a large customer’s failure can push its suppliers into failure too.

One late payer can ripple through several businesses. That’s exactly what happened between Bill and his wholesaler.

4. No early warning and no safety net

Research into small businesses shows that owners tend to deal with cash problems after they appear, rather than managing them in advance. Studies of failed small firms also found that a lack of financial knowledge was among their biggest problems. Knowing the risks is a big part of resilience.

Bill had no forecast, so May came as a shock, even though the warning signs were visible from February. He also had no overdraft or credit line, so when the retailer paid late, nothing absorbed the hit.

In short: growth lengthens the cash gap, late payers widen it further, owners usually spot the problem only once it has arrived, and without a credit line there’s nothing to absorb the shock.

The good news is that every one of these causes can be managed. Here’s how.

Your cash rescue plan: 5 moves

Move 1: See it coming

Most cash crises aren’t sudden. They’re just unseen.

Forecast 13 weeks ahead. A simple week-by-week cash forecast shows your lowest point before you reach it. Bill’s would have flagged May’s zero balance three months early, which is plenty of time to act.

Check five numbers every Monday (20 minutes):

Cash runway: cash in the bank ÷ average weekly outgoings. Under 8 weeks is a warning sign.
Lowest point ahead: the lowest balance in your forecast.
Debtor days: how long customers take to pay you. Watch whether it’s rising.
Creditor days: how long you take to pay suppliers. If it’s much shorter than your debtor days, you’re funding your customers.
Stock days: how long stock sits before it’s sold.

Ask “what if?” before big decisions. Rerun your forecast for three scenarios: your biggest customer pays 30 days late, sales drop 20% for two months, and the decision itself (a new hire, a big contract, new equipment). If any of them takes you below zero, fix it before you commit.

Write a one-page “if cash gets tight” plan now, while things are calm. It should say which costs you’d pause, who you’d chase, which suppliers you’d call and who you’d ask for finance.

Move 2: Get paid faster

Speeding up how quickly customers pay is usually the quickest win. If Bill’s customers had paid in 30 days instead of 60, all else being equal, he’d have finished June with around £47,000 in the bank instead of an overdraft.

Invoice the day the work is done, not at month end.
Shorten payment terms for new customers, for example to 14 or 30 days.
Take deposits or stage payments on larger jobs, such as 30–50% up front.
Make paying easy: card payment links on invoices, Direct Debit for regular customers.
Chase consistently: a friendly reminder before the due date, a call on the first day it’s overdue, then a formal letter.
Know your rights: UK late payment law lets businesses claim interest and compensation from other businesses that pay late. Mention it in your terms, even if you rarely use it.
Vet big new customers. A large contract is only good news if the customer pays reliably.

Move 3: Pay out smarter

Negotiate longer terms with suppliers, ideally so you get paid before you have to pay. If Bill had agreed 30-day terms on his materials, he’d have kept about £17,500 more in the bank by June.

Build relationships before you need them. Suppliers you’ve always paid on time are far more willing to help when you ask for a little flexibility.

Talk early. A phone call before a payment is due (“Could we split this into two?”) goes much better than silence afterwards.

Prioritise when cash is tight: wages, rent, key suppliers and HMRC come first. Everything else can be negotiated or paused. If you can’t pay a tax bill, contact HMRC before the deadline about a Time to Pay arrangement.

Review prices yearly. Get competing quotes before renewing major contracts.

Move 4: Plug the leaks

Every pound you don’t waste is a pound you don’t have to find.

Clear slow-moving stock. Anything unsold for 90 days is cash sitting on a shelf. Discount it, return it, or order smaller amounts more often.
Cut energy and material waste: compare tariffs, switch equipment off overnight, and track rework and scrap for a month to find the biggest source.
Cancel what you don’t use. Review subscriptions, phone contracts and memberships every quarter.
Streamline your processes. Map the path from quote to job to invoice to payment, then remove or automate any step where work sits waiting.

Move 5: Build a safety net before you need it

Set a cash buffer target, such as 4–8 weeks of fixed costs, and treat dropping below it as an alarm.

Arrange finance while trading is strong. Lenders say yes more easily to a growing business with a forecast than to a desperate one. Match the type to the need:

Overdraft or revolving credit facility: for short gaps, like a late-paying customer.
Invoice finance: turns unpaid invoices into cash. It’s ideal for a fast-growing business like Bill’s.
Asset finance: spreads the cost of equipment and vehicles.

Understand the full cost (interest, fees and any personal guarantees) and talk it through with your accountant first.

What happened to Bill?

Bill arranged an invoice finance facility, moved new customers to 30-day terms with deposits on large jobs, and agreed longer terms with his main supplier. Most importantly, he now checks a 13-week cash forecast every Monday. He’s still growing, but now he can see the cash gap coming and fund it before it arrives.

Start this week

Work out your cash runway and your lowest balance in the next 13 weeks.
Send any invoices for work already done.
Chase your three oldest overdue invoices.
Call one key supplier about longer payment terms.
Book 20 minutes every Monday for your cash numbers.

Growth should be exciting, not terrifying. Profit tells you whether your business works. Cash tells you whether it survives long enough to prove it.

Want to see your own lowest point? If you use Xero, try the free Promeflow cash check. Upload one report and in about two minutes you’ll see your tightest cash week over the next 13 weeks, what’s causing it and one thing to do about it.

This post is general information, not financial, tax or legal advice. Speak to your accountant about your own situation.