Quick overview
This checklist helps you spot problems before they become emergencies. Follow daily, weekly, and monthly tasks, use the decision rules, and apply the examples to your numbers.
Daily checks (5–10 minutes)
- Bank balance vs. next 7 days' outflows — Compare your checking account to scheduled bills and payroll for the week. If balance < required outflows, act (see decision rules).
- Open invoices — Scan outstanding invoices due this week. Prioritize calls or emails for invoices past 7 days.
- POS or sales totals — Confirm daily sales deposited and flag unusual drops or spikes.
Weekly tasks (30–60 minutes)
- Cash flow forecast — 13-week — Update a simple 13-week table: starting cash, expected receipts, expected payments, ending cash. Color rows: green = positive, yellow = within safety buffer, red = negative.
- Accounts receivable review — Sort by age: 0–30, 31–60, 61–90, 90+. Call or email anyone in 31+ immediately. Offer a 2% early-pay discount for payments within 7 days if useful.
- Payroll check — Verify payroll date and funding. If payroll will push you below reserve, delay nonessential payments or use short-term financing.
- Inventory re-order — Check top 10 SKUs by sales velocity. Reorder when on-hand days ≤ lead time + safety days. Example: lead time 10 days + safety 5 days = reorder at 15 days of stock.
Monthly tasks (1–3 hours)
- Profit & loss vs. cash — Reconcile P&L to cash movement. Non-cash expenses (depreciation) should not affect the cash forecast; adjust accordingly.
- Calculate DSO (Days Sales Outstanding) — Formula: (Accounts Receivable ÷ Total Credit Sales) × Number of Days. Target: industry standard or under 45 days. If DSO rising by >5 days month-over-month, escalate collection efforts.
- Review vendor terms — Negotiate extended terms where possible (e.g., net 30 → net 45). Ask for small discounts for early payment (1–2%) and track savings.
- Debt and line review — Check outstanding balances, next payments, and availability on lines of credit. Keep at least one emergency source with headroom ≥ next month's payroll.
Quarterly tasks
- Reserve target check — Rule of thumb: keep 1–3 months of operating expenses in reserve. Aim for 3 months if sales are seasonal or credit is tight.
- Break-even cash — Calculate monthly fixed costs. If your average monthly gross margin covers less than fixed costs for 2 months, plan cost cuts or revenue actions.
- Supplier concentration — If >30% of purchases come from one supplier, source alternatives to reduce disruption risk.
Decision rules (simple yes/no prompts)
- Do I need financing? — Yes if projected ending cash is negative in any of the next 13 weeks and you cannot postpone nonessential payments or increase receipts quickly.
- Take a short-term loan or factor invoices? — Choose factoring if DSO > 60 days and the cost of factoring < 2% per 30 days relative to your need. Choose a short-term bank loan if you can repay quickly and borrowing cost < lost opportunity from late payments (penalties, lost supplier discounts).
- Cut expenses now? — Cut nonessential expenses if cash reserve < 1 month AND forecast shows negative cash within 8 weeks.
Collections script (quick phone/email template)
Phone: "Hi [Name], this is [You] at [Business]. Your invoice #[#] for $[amount] was due on [date]. Can you confirm when payment will be made? We can accept card, ACH, or offer 2% off if paid within 7 days." Email version: same language in a short subject line: "Payment due: Invoice #[#] — [Amount]".
Practical examples
- Example 1 — Payroll gap — Payroll $20,000 due Friday. Checking $15,000. Accounts receivable expected next Tuesday $8,000. Decision: cover payroll by moving $5,000 from reserve + call customers to accelerate $3,000; or take a $5,000 short-term overdraft if fee < lost costs.
- Example 2 — Inventory buy — Bulk discount: buy $50,000 inventory now save $5,000 (10%) but reduces cash below reserve. Decision rule: only buy if expected sales turnover > 30 days and margin improvement > financing cost; otherwise negotiate smaller purchase or delayed delivery.
Tools and templates to keep handy
- 13-week cash flow spreadsheet (columns: week, starting cash, receipts, payments, ending cash).
- AR aging report export from your accounting system.
- Top 10 SKU sales velocity report.
Red flags that need immediate action
- Any week in 13-week forecast shows negative ending cash.
- DSO increases by more than 5 days in a month.
- Bank balance falls below payroll amount and no incoming receipts are confirmed in 3 business days.
Final quick checklist (printable)
- Daily: Check bank vs 7-day outflows; review open invoices; confirm daily deposits.
- Weekly: Update 13-week forecast; call 31+ day customers; verify payroll funding; check top SKU reorder points.
- Monthly: Reconcile cash to P&L; compute DSO; renegotiate vendor terms; review credit lines.
- Quarterly: Maintain 1–3 months reserve; check supplier concentration; prepare contingency financing plan.
Use this checklist once a week. Spend time where numbers are red. Small, regular fixes prevent big emergencies.