A company can last years without profits. Without cash it won't last a month.
Companies don't close because they make losses: they close the day they can't pay. You can sell a lot, have good customers and a product people like, and still run out of money for payroll. That is why cash comes before any other figure, and why you need to know at all times how much there is and how much there will be.
A sale isn't money until it is collected. If your customers pay at 60 or 90 days, you are financing their business with your cash. Look customer by customer at the agreed term and, above all, at when they really pay, which is almost never the same. A few days' delay repeated across the whole customer base is a lot of idle money.
The other side of the equation is your suppliers, payroll and taxes. If you pay at 30 days and collect at 90, every new sale opens a two-month gap that someone has to cover, and that someone is you. The more you grow, the bigger the gap. Bringing the two terms closer together is one of the decisions that frees up the most cash.
Your customer base is not untouchable. When a customer is habitually late, or their weight in your sales leaves you too exposed, it's time to act: renegotiate terms, ask for advance payments, limit the credit you extend or reduce what you sell them. A big customer who pays late can be more dangerous than not having them. This review is repeated every time circumstances change.
The most common mistake is going to the bank when there is already a problem. At that point you have worse numbers, less time and no leverage to negotiate, and you will most likely be turned down or offered expensive terms. Loans and credit lines should be requested when cash is favourable: that is when they are granted, on better terms, and when you get to choose. Taking on debt with healthy cash is buying peace of mind for the bad months to come.
Look at your cash every week. Know your days to collect and your days to pay. Adjust your customer base without waiting for the problem to blow up. And secure financing before you need it.
Further reading: Working Capital Study 25/26 (PwC); Navigating 2025 working capital trends: Priorities for 2026 (Deloitte).
