Cash flow trouble usually develops before the bank reaches zero. Repeatedly postponing bills, relying on one late customer payment or using money intended for known commitments can signal that the business needs closer review. A temporary timing gap and a persistent trading shortfall require different responses.
In this article
- Spot repeated cash shortfalls
- Build a near-term payment picture
- Contact your adviser promptly
- Agree actions and monitor cash closely
Look at patterns rather than one uncomfortable day. A business may have a predictable seasonal low point with a supported funding plan. The same bank balance can be much more concerning where invoices are disputed, supplier terms have shortened and forecasts repeatedly miss receipts.
Watch behaviour as well as balances
Managers sometimes adapt to pressure so gradually that it becomes normal: paying only the loudest supplier, delaying record updates or assuming the next contract will fix everything. These behaviours can hide a growing problem from reports.
| Warning sign | Useful first investigation |
|---|---|
| Payments regularly moved forward | Are dates genuinely agreed or merely hoped for? |
| Forecast receipts repeatedly missed | Collection disputes, approval or unrealistic assumptions |
| Supplier credit withdrawn | Overdue balances and relationship history |
| Borrowing constantly near its limit | Facility conditions and underlying funding cycle |
| Records falling behind | Missing liabilities and unreliable opening cash |
| Profitable reports but little cash | Debtors, stock, equipment and financing movements |
No single sign proves insolvency. Several recurring signs justify prompt investigation and a more frequent cash review.
Establish a reliable immediate picture
Reconcile available cash and list payments due over the next few weeks. Include payroll, suppliers, finance and tax commitments. Identify restricted money and confirm what facilities can actually be used.
Build a short rolling forecast with named customer receipts and evidence for their dates. Separate disputed invoices and unconfirmed new sales. Keep a downside where material receipts slip.
Illustrative example: a business repeatedly forecasts a £10,000 customer payment “next week”. After three missed dates, it discovers that acceptance of the work is disputed. Treating that payment as reliable concealed the need to address the dispute and other upcoming commitments.
The invented scenario shows why moving a receipt forward is not neutral maintenance. The missed assumption should produce an action and a revised assessment of risk.
Identify the type of problem
Check whether the pressure comes from timing, weak margins, excess stock, growth commitments or withdrawals. More borrowing may bridge a credible temporary gap, but it does not automatically repair work that consistently consumes more resources than it earns.
Review major customers and projects, not only totals. A healthy business segment can conceal another that drains cash. Connect the forecast to current trading and balance-sheet evidence.
Do not implement drastic cuts solely from an incomplete dashboard. Missing invoices or duplicate payments may explain part of the apparent issue. Accurate records and operational discussion are both necessary.
Seek the right support early
Contact the accountant with reconciled figures, aged debts, supplier balances, finance agreements and the forecast. Explain missed payments, threatened supply restrictions and any formal demands. Keep the information current rather than waiting for perfect year-end accounts. Include personal guarantees or security commitments in the briefing where relevant. Ask which immediate decisions require specialist review, what information is missing and when the next position update should occur. This gives the conversation a concrete outcome beyond a general request for help.
If tax payment is at risk, HMRC’s guidance explains that an instalment plan may be possible, subject to assessment and agreement. Do not count an application as confirmed relief or omit the liability from the forecast.
Where a company may be unable to pay debts as they fall due, obtain appropriate insolvency advice promptly. The Insolvency Service explains directors’ duties upon insolvency, including the shift towards creditor interests. Do not use a cash forecast as a substitute for that legal assessment.
Keep proposed actions honest
Distinguish proposed funding, requested payment changes and completed actions. Record who must agree each step and when. An owner’s intention to introduce money is not the same as an evidenced available transfer.
Consider operational consequences before cancelling purchases or delaying work. A cash-preserving action can also prevent delivery and collection. Review the trade-off with current facts and relevant advisers.
Keep a dated decision log and review the position frequently while pressure persists. EPOS cash flow support can be discussed around forecasting and the records behind decisions. Outsourced CFO support is relevant to broader planning, while legal or insolvency matters require the appropriate specialist scope.