Hello Reader,
Most business owners have a monthly habit. They check the profit and loss, see how the month went, and move on to the next one. That's useful. But on its own, it isn't enough.
A monthly report only tells you what already happened. By the time a cash problem shows up there, it has usually been building for weeks. Say a big customer pays two weeks late in August. By the time you see it on your August report, it's already September, and you've already scrambled to cover a gap you didn't see coming. A weekly check would have flagged that same problem three weeks earlier, while there was still time to act.
There's a simpler number worth checking more often. It's the gap between what's leaving your account in the next seven days, and what's actually coming in over that same week.
Not hopeful invoices. Not "they said they'd pay by Friday." Just the money you're sure about, on both sides.
I see this all the time. Owners who check that gap every week rarely get caught out. Owners who only look once a month almost always do. Not because they're careless. A month is just too long a stretch to catch a small problem before it turns into a big one.
It takes five minutes. Every Monday, before anything else, try this:
- Check what's actually sitting in your account right now.
- Write down what's due to leave in the next seven days.
- Write down the money you're sure will come in during the same week.
- If the gap looks tight, deal with it this week. Not next month.
Here's a simple rule to add. If the gap is under $2,000, treat it as a warning sign. That's usually enough room to call a customer, delay a non-urgent bill, or move some money across, before it becomes a real problem.
That's the whole system. No software. No spreadsheet needed to start.
Try it this Monday. It's a small habit, but it stops most of the surprises business owners tell me about after they've already happened.
Before you go, put one thing in your calendar right now. Every Monday, 9am, five minutes, cash check. Not next week when you remember. Now, while you're reading this.
Talk soon,
Paul Sweeney
Chartered Accountant & Business Advisor
