Cash-flow troubleshooting guide

Start with the symptom, not the panic

A cash squeeze almost always has a single dominant cause hiding behind several smaller ones. Before you chase an overdraft or a finance facility, spend an hour pinning down why the bank balance is tighter than your profit suggests it should be. A company can be genuinely profitable and still run out of cash because profit is an accounting measure and cash is a timing measure.

Work the six areas below in order. Each has a quick test you can run from your management accounts or bank feed. Stop when you find a cause that explains most of the gap — fix that first, then re-check before moving on.

The six-point diagnostic

Check	Quick test	Likely fix
1. Debtors	Average days to get paid vs your terms	Tighten credit control; invoice on delivery, not month-end
2. Creditors	Are you paying suppliers faster than customers pay you?	Re-negotiate supplier terms
3. Stock	Months of stock sitting idle	Clear slow lines; order to demand, not habit
4. Tax	VAT/PAYE/CT due dates landing in clusters	Ring-fence tax in a separate account
5. Drawings	Dividends/director loans vs retained profit	Set a sustainable drawings rule
6. Growth drain	Sales rising but cash falling	Fund the working-capital gap, don't starve it

Build a 13-week rolling forecast

The single most useful tool in a squeeze is a short-horizon forecast. Thirteen weeks is long enough to see the next VAT bill and quarter-end, short enough to keep accurate. List every expected receipt and payment by week, week by week, and carry the closing balance forward.

1. Open with today's actual bank balance.
2. Add receipts in the week you'll actually be paid, not the week you invoice.
3. List fixed costs (payroll, rent, loan repayments) on their real dates.
4. Add tax payments on their statutory due dates.
5. Flag any week the balance goes negative — that's your action date.

Update it every Monday. A forecast you revise weekly is worth ten that you built once. Our cash-flow forecast template gives you the grid.

Fix in order of impact

Resist fixing everything at once. Tackle the largest lever first. For most trading companies that's debtor days: pulling 40-day payment back to 30 frees a month's sales in cash, permanently, at no cost. Stock and creditor timing usually come next.

Only once the operational levers are pulled should you size any external funding. If the remaining gap is a genuine timing mismatch — you're profitable but the cash arrives after the bills are due — short-term working capital can bridge it cleanly. If the gap is structural (you lose money on every sale), borrowing postpones the problem rather than solving it. Be honest about which you have.

When a facility is the right answer

Bridging a predictable, temporary gap is exactly what working-capital finance is for: a seasonal dip, a large order that ties up cash before it pays out, or a lumpy tax quarter. The question to answer first is how much and for how long — your 13-week forecast gives you both. Size the facility to the peak shortfall plus a modest buffer, not to a round number that feels comfortable.

A revolving facility such as Credicorp Flex suits recurring timing gaps because you draw and repay as cash moves; a fixed business loan suits a one-off, defined need. Credicorp lends to the company, with no personal guarantee from the director. This page is educational, not financial advice.