🎯 How We Helped a Client Improve Cash Forecasting by 20%

Have you ever wondered why your monthly cash forecasts aren’t aligning with reality? 📉 

That was the case for one of our clients—they were consistently missing their cash flow forecast by 15-20%…ouch. The kicker? They couldn’t pinpoint why.

Let me share how we turned this situation around and helped them regain control of their finances quickly.

The Problem:
When we dove into their books and overall process, the issue became pretty clear. The client was juggling two major challenges and they didn’t have control of either. It took me back to when I first started in accounting and was told if I don’t know to ASK. That was the main reason they were struggling is their backgrounds weren’t accounting/finance, but primarily sales driven…totally ok, but they noticed an issue and let it drag way too far out.

1️⃣ Aging Receivables: They were carrying significant debt due to unpaid invoices. Cash that should have been in their account was stuck in limbo, their customers didn’t even know they had a balance due (uh oh…), or they weren’t sure how to approach the customer about paying timely.

2️⃣ Uncontrolled Payables: Without a structured schedule, payables were released erratically, causing their cash outflow to spike at the wrong times. I asked what their cadence was for paying vendors and come to find out there wasn’t really any cadence at all. So, time to fix that!

These issues combined to create a distorted view of their financial health each month and they expected higher EBITDA numbers, but in reality, they were falling short.

Thank you CompareCredit!

Thank you to CompareCredit for sponsoring our newsletter once again! If you missed this in prior editions, they can give you insights into credit cards. I’m a small business owner so the right card matters to me. If you have a team that uses P-Cards, check this out by following their link below. New year is coming so why not take advantage of cash back, larger limits, etc. for your team?

Top Card Offering 0% Interest until Nearly 2026

This credit card gives more cash back than any other card in the category & will match all the cash back you earned at the end of your first year.

Learn More

The Solution: Small Changes, BIG Impact

1. Receivables Management
We implemented simple but effective changes:

• 📤 Automated Payment Reminders: Late-paying clients received friendly nudges to settle invoices promptly on the due date if they didn’t have the invoices marked as PTP (promise to pay) in their ERP system.

• 🕵️ Proactive Monitoring: We created a daily AR dashboard to flag overdue accounts before they became problems. We implemented simple Excel strategies that gave them a clear visual of potential issues that were coming.

The result? Faster cash collections and fewer receivables aging out. These small changes alone started driving in thousands of dollars for their business within 1 week.

2. Payables Optimization
On the AP side, we introduced structure and strategy:

• 📅 Scheduled Payables Release: Instead of reacting to due dates, we aligned payables with projected cash inflows. This allowed them to relay to all vendors the dates they can expect a payment to be released per policy.

• 🧾 Daily Cash Tracker: This tool balanced funds coming in versus going out, helping us decide when to release payments and when to hold back. This is big in my opinion if you are a SMB owner/leader. What do you look at daily to know where cash is at? Anything?

By managing payables more intentionally, we avoided unnecessary cash crunches.

The Result: Forecasting Confidence Restored!!
Within just a few months, these changes delivered the below for them:
✅ A reduction in forecast variance from 20% to less than 5%.
✅ Improved cash flow visibility and control.
✅ Peace of mind knowing their receivables and payables were managed proactively.

Managing cash flow is as much about timing as it is about dollars. When AR and AP are in sync, your cash flow reflects your business’s true health—and forecasting becomes a tool you can trust.

Does your business struggle with missed forecasts or cash flow challenges? Let’s talk about how we can bring clarity to your finances in 2025. I have some sweet discounts going on through December, so take advantage of that!

If you missed yesterday’s Small Business Saturday posting, click here!

Was this email forward to you or did you find it on one of my socials? 👉 Subscribe to The Cash Flow Chronicles for more insights like this!

Another resource for management is below. Check out the MGMT Playbook for actionable insights each week.