Your Bank Balance is Lying to You

This isn’t a hypothetical. This is a real story about a real business owner who almost let her company slip through her fingers because of one habit that’s more common than you’d think.

She was running her business by her bank balance.

Every morning she’d check what was in the account, decide what she could spend, pay what felt urgent, and move on. No budget. No forecast. No real picture of what was coming in or going out beyond what she could see on her phone screen.

For a while it worked. Business was good, work was flowing, and the balance stayed healthy enough that nothing felt alarming. But then the slow season hit.

In her industry slow periods are normal and expected. But because she had never tracked her cash flow or planned around the seasonal dip, she had no idea it was coming until it was already there. Equipment loan payments didn’t slow down just because new work did. Payroll didn’t pause. Fixed expenses kept showing up like clockwork while the incoming revenue slowed to a trickle.

So she did what a lot of business owners.

She reached for the credit cards.

By the time I came in the business had racked up credit card debt just to cover normal operating expenses. And the worst part was none of it was necessary. The slow period was predictable. The cash crunch was avoidable. But without a system to see it coming there was no way to prepare for it.

The first thing we did was build a 90 day cash flow forecast.

Not complicated. Not fancy. Just a clear picture of every dollar expected to come in and every dollar expected to go out over the next three months. When we laid it out she could see exactly where the gaps were, when new work would hit the account, and how to sequence her payments to get ahead of the debt instead of just treading water.

She signed new work right around that time and with the forecast in place she could see exactly how to deploy that revenue strategically. Within 90 days she had paid off the credit card debt, cleared past due balances that had been lingering, and walked into the next quarter with cash in reserve for the first time in a long time.

The credit card debt was the cost she could measure.

The stress, the sleepless nights, the decisions made from a place of panic instead of clarity, that cost doesn’t show up on a P&L but every business owner who has been there knows exactly what it feels like.

A 90 day cash flow forecast is one of the most valuable tools I build for my clients. It’s not complicated and it doesn’t take too long but the visibility it gives you changes everything. Running your business without one is like driving at night with no headlights and hoping the road stays straight.

If you’re running your business by your bank balance right now you’re not alone. But you don’t have to stay there.

I offer a free initial financial review. Let’s talk.

~Wendi | Fractional CFO | PVIFinancial.com

Click here to read “What is a Fractional CFO and Does Your Small Business Need One”