A profitable business can still run short of cash
Put receipts and payments on a timeline and assess the impact of delayed collections.
Profit describes performance over a period. Cash planning asks when money is available and when payments fall due. Credit sales, deposits, inventory, equipment and debt repayments can create differences, depending on the business.
Start with available funds and timing
Establish the usable opening balance. Show restricted or frozen funds separately and do not count transfers between your accounts as new income. Place expected receipts and payments on dates or weeks suited to the decision.
Closing available funds = opening available funds + expected receipts − expected payments.
This is a cash-planning relationship, not a profit formula. Cover all relevant receipts and payments; missing payments must not be assumed to be zero.
Keep confidence and conditions visible
| Item | Information to retain |
|---|---|
| Customer collections | Terms, due dates, delivery conditions, payment history and possible delays |
| Payroll and operating costs | Payment dates and known amounts; label assumptions |
| Purchases or project inputs | Committed and adjustable spending, deposits and later payments |
| Equipment and borrowing | One-off or staged spending, principal and interest separately |
Test a delayed-collection scenario
Suppose a final project payment is expected mid-month while payroll and subcontractor payments fall due later. Moving the expected receipt shows which week could develop a shortfall. This does not establish that the customer will pay late or that the forecast is accurate.
Compare the current expectation with a material delay. Present the lowest available balance, timing of any shortfall and assumptions together before considering collections or adjustable spending. A positive month-end balance does not rule out a shortfall earlier.
Update the plan as facts change
Replace the relevant forecast with actual receipts and retain the unpaid portion; do not count both. Continuing work follows the user's instructions about scope and timing. New commitments and money movements remain decisions for authorized people.
This is a general planning method and an illustration, not a customer case or product performance evidence. See the CaiGeek website for released capabilities.
Written with AI assistance. Examples illustrate analysis methods; apply them using business records and relevant conditions.
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