I’m going to say something that will annoy some of you.
If you’re constantly stressed about cash, it’s probably not because you need more sales.
It’s because you’ve tolerated sloppy cash systems for too long.
When I do sales calls for my business, Bison CFO, I hear the same answers about how they’re going to improve their business over and over again: more sales, better margins, cut expenses.
But then, as we dig in, I find the same trends.
We’re always cash poor. I can never seem to get ahead. Taxes are a surprise.
Most SMBs have a cash problem, but few really know how to deal with it. Today I wanted to write about the most common cash breakdowns you see in small businesses.
THE CASH PROBLEMS YOU KEEP IGNORING
Here are the most common cash breakdowns I see in small businesses.
YOU INVOICE INFREQUENTLY
I’ve lost count of the number of business owners I talk to who don’t have a regular invoicing schedule. And even those that do often haven’t optimized it.
“O yes, I do invoices on a schedule.” But then: work gets done, then wait until the 15th of the following month to invoice and give them 30-day terms.
If work is completed on the 1st and invoiced on the 15th of the next month, that’s a 45-day lag before the clock even starts.
Add 30-day terms and you’re at 75 days.
In a service-based business with bi-weekly payroll, that can mean:
- Payroll #1
- Payroll #2
- Payroll #3
- Payroll #4
- Payroll #5
…before you get paid for the original work.
And if the client pays two days late? That’s payroll #6.
Then you tell me “cash is tight.”
No. Your systems are too slow and broken.
YOU DON’T ACTUALLY COLLECT
You do the work, you send the invoice, and you take a deep breath. You assume, “Money is coming.” But then you wait and you wait and you wait. What was due in 30 days turns into 30 days, 60 days, 90 days late.
You wonder, “When is the money coming?” but you’ve never done anything to actually ensure it gets there.
No automated outreach. No calls. No escalation. No accountability.
Sometimes this can be a function of just mismanagement on the customer’s part. The email went to spam, contacts changed, or somehow the invoice just didn’t get in their system. These are the low-hanging fruit that just a call can break loose.
But the reality is the longer you wait for that initial contact, the less likely it is you get paid. Money gets allocated to other places, and then eventually you may hear “we don’t have it” or you get completely ghosted.
These cash problems are often communication and system problems.
YOU’RE GROWING FASTER THAN YOUR WORKING CAPITAL
All businesses have a problem when growth outpaces the collection of the cash related to that growth.
For inventory businesses, paying for the inventory up front often means you’re having to front cash, which means that faster growth means you’re fronting more and more cash.
For infrastructure-heavy businesses, cash can get eaten by the infrastructure reinvestment needed to continue on their growth path.
For tight margin service businesses, the constant drone of payroll and limitation of your line of credit can mean that you don’t generate enough profits to cover the pace of growth.
This is especially bad when your cash collection cycle lags like we talked about in the first two.
Growth without structure feels like success on the outside and panic on the inside.
YOUR LINE OF CREDIT DOESN’T FIT THE BUSINESS
When you start your business, you go to one of two places for your banking:
- A big national bank
- A local one with someone you know
This is not a problem, but as your business grows, you ask for a line of credit, and what you generally get is something pretty basic.
They gave you a baseline product with default restrictions.
The problem is different banks have different strengths and weaknesses. The big national bank may not give you the attention you need or know your business well enough to flex as you grow. The local bank may specialize in, for example, real estate and not completely understand your business.
So when the business starts growing, you end up with a bank that’s inflexible to your needs.
Say you have one customer who has grown rapidly and caused your business to grow, but the national bank restricts the customer to 20% of your accounts receivable. In doing so, you as the business owner have to start funding that customer’s growth.
Or say you’re in a real estate-focused bank. The covenants on their typical line of credit are going to be geared towards real estate businesses. If you have an inexperienced lender, they may not know how to put the right covenants in for your type of business.
Both of these examples can lead to a mismatch between a banking partner and your business.
You need to find the right partner before you need all the tools. The right partner will give you all the tools you need.
YOU HAVE BLEEDING MARGINS
This may not seem like it’s a cash issue, but this is what I like to call disappearing cash. In a service business, it’s when you don’t charge your bill for overtime, but then you don’t incentivize your schedulers to reduce overtime. That means all overtime dollars being paid are just lost into the ether. They’re eating away at margins that have a real impact on what turns into cash.
The same can be true for inventory and manufacturing businesses. The cost of the good or cost of production goes up, and you keep your prices the same.
Initially, in any of these scenarios, it seems like a small margin swing, but over time, this can eat away at your cash balances.
Proactively managing those margin swings is going to allow you to see the issues before they truly become issues and act quickly to correct your path.
BUYING ASSETS FROM YOUR CASH
When a business has large asset needs, you need to have a banking partner in access to the right debt.
The problem happens when you’ve historically bought off of the cash balance. This can work for a period of time, but as you scale, cash is eaten by that growth and by the additional asset purchases, leaving you cash poor.
The real issue here though, is that you’re not planning your asset buys. You make the purchase today because the cash balance looks good, but don’t think about the purchase that you need in six months when you’re cash poor.
You may think, “Oh yeah, the bank will just give me a loan for that.” But if you haven’t set up the infrastructure, you could end up in a spot where the bank doesn’t want to loan you the money. Or, you have to accept a higher rate than you would have if you’d planned for those loans in advance.
Large asset purchases need to be planned in advance, and banking or debt partners need to be procured and included in that planning process.
REAL EXAMPLE: SCRAMBLING FOR CASH
I once worked with a business that grew from under $10M to over $30M in less than three years.
On the surface, they looked like they were crushing it. But on the inside, they were scrambling for cash.
Every payroll was an exercise in wondering where the money was going to come from. There were multiple instances of collecting from the client what was needed for payroll on that same day.
As we looked at the business, we saw some considerable issues:
- Almost no cash in the bank
- Significant AR over 60 and 90 days
- 45-day invoicing lag (billing on the 15th of the next month)
- Default 30-day payment terms
- Generic line of credit
- Unprofitable jobs due to poor quoting
- Overtime driven by both scheduling mistakes and last-minute client requests
Revenue wasn’t the problem. But the cash systems (timing and discipline) were a huge issue.
So we knew we had to address two main issues quickly:
- Improve cash position
- Rebuild margin discipline
Because if we didn’t stabilize cash, growth would push them into a payroll crisis.
Here’s what we did.
STEP 1: AGGRESSIVE AR COLLECTION
We started calling. Not emailing. Calling. And even sometimes visiting in person.
Sometimes the person responsible didn’t even know the invoice was outstanding and money started coming in immediately.
Other times, we found broken internal processes at larger clients and worked non-stop to help them resolve it.
Result: DSO dropped from 61 days to 43 days.
STEP 2: SPEED UP THE INVOICING PROCESS
They were invoicing once per month on the 15th.
We split billing into two buckets:
- Ongoing jobs: billed twice per month, 10 days after period end
- Temporary jobs: billed immediately upon completion
Before, temporary jobs were often billed well after the job was completed, which meant that many of them were getting paid slowly, or in some cases, not paid at all.
We also fixed a deeper operational problem: Schedulers were inconsistent entering schedules.
Old software. Friction. Manual systems. Text messages.
We implemented new scheduling software.
What changed?
- Weekly schedule confirmation
- Time confirmed within 3 days after week-end
- Invoices ready within 10 days of period close
This didn’t just improve accounting, it improved:
- Scheduler workflow
- Employee clarity
- AR accuracy
- Invoice freshness (which improves collections)
Money started hitting the bank 20–50 days sooner depending on the contract.
That is transformational in a payroll-heavy business.
STEP 3: RESTRUCTURING THE LINE OF CREDIT
The bank they worked with was the one they’d set up when they started the business. They were working with a large national bank and found that they had too many policies to be able to work as closely as needed with a business growing this quickly.
So we started helping them shop for banks. We found a bank or two that understood the industry and pitted them against each other to find the best partner we could.
Result:
- Increased overall LOC capacity
- Increased customer concentration limits
- Reduced structural friction
That move alone allowed them to fund 20% month-over-month growth overnight.
Not by selling more, but by structuring debt better.
THE RESULT
After these cash moves:
- DSO reduced from 61 to 43 days
- Billing cycle tightened by 25–50 days
- Cash conversion improved by 43 days
- LOC capacity doubled
Payroll stress disappeared and they were finally able to breath easy. Once we fixed the cash issues, we were able to take other steps to help them build a more sustainable and profitable business over the long term.
Three years later, the owner went from injecting personal cash to taking consistent monthly draws.
This business didn’t have a growth or really even a huge profitability issue. What they had was a cash issue, and it was the most stressful thing you can imagine.
So if you’re feeling constant stress in your business, it is growing. Stop always assuming the lever is “more growth.”
Instead, rethink how cash moves through your business. Ask:
- Could I work with a different supplier to not have to pre-pay so much inventory?
- How many payrolls occur before I get paid?
- How fast do I invoice after work is complete?
- How disciplined is my AR cadence?
- Is my line of credit built for growth or survival?
- Do I have a 13-week cash forecast?
Cash tells the truth. It’s not emotional, but is structural and systems-driven.
