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Strong cash management is not just tracking numbers. It’s defining limits that trigger action by you or your team. I know some of you are solo out there, so you have to wear many hats. If you have questions, let me know.
Risk thresholds tell you when receivables or cash conditions are becoming unsafe. Without them, teams react late and stress builds quickly when a large invoice isn’t coming in.
Start with cash buffer thresholds
Minimum cash balance required to operate safely (you gotta know this!)
Weeks of payroll you must always cover
Amount of collections that must arrive to stay stable
If cash drops near these levels, action is automatic.
Set AR risk thresholds
Maximum acceptable past-due percentage which should be beating your industry standards btw…
Largest single customer exposure limit tracked closely
Aging bucket levels that trigger escalation (think 30+ = issues…)
Number of missed payment commitments allowed
When these thresholds are crossed, follow-ups, credit limits, or spending decisions change immediately.
Why this works
Decisions become objective, not emotional
Problems are addressed early
Leadership stays proactive instead of reactive
Keep thresholds visible
Review them weekly. Adjust them as the business grows. Enforce them consistently.
February is about receivables that convert into predictable cash. Risk thresholds protect that predictability.
If you want help defining cash buffers or AR limits, reply to this email, message me in the community, or email [email protected]. Clear limits create financial control.
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