How to manage business cash flow: forecasts and practical actions

Your bank account shows CHF 25,000. Salaries are approaching, a customer still owes you money and several invoices await payment. Can you commit to another expense? The bank balance alone cannot answer that question.

Managing cash flow means knowing whether money will be available when payments fall due. You need credible dates, a few calculations and practical actions. Take a small service business: we will follow its cash over a month, then see what changes when a customer pays late.

Cash flow and profit: what is the difference?

Profit indicates whether your activity earns more than it costs. Cash is the money available to pay expenses. The two measures do not follow the same timetable.

You may finish and invoice a service, then wait another thirty days for payment. Meanwhile, salaries and rent continue leaving the account. Conversely, a loan increases cash when disbursed but does not create profit: the money must be repaid.

This distinction changes your decisions. If a reliable customer pays two weeks late, you need to bridge a timing gap. If each service costs more than it earns, you need to review prices, costs or organisation. Chasing customers will not fix that second problem.

Forecast the coming weeks

Start with three records: current bank balances, unpaid customer invoices and a list of upcoming payments. A spreadsheet is enough to begin. If you have several accounts, combine the amounts actually available and keep restricted funds separate.

For each movement, record when the money is expected to enter or leave the account. An invoice date is not a receipt date. If a customer usually pays late, use a realistic assumption and flag uncertainty.

Our service business starts November with CHF 25,000 and expects CHF 20,000 in customer payments. Planned outgoings total CHF 35,000.

Amounts represent bank movements, including VAT where applicable. Some expenses are grouped to simplify the example. Keep their actual dates in your own forecast.

The month-end calculation is simple: CHF 25,000 + 20,000 − 35,000 = 10,000. But the balance column is just as useful: it shows whether the business can pay at each step. A positive monthly total is not enough when customers pay after major commitments fall due.

Extend the forecast far enough to capture upcoming major expenses, then refine it week by week as due dates approach. Our article on the cash flow budget explains how to build the table. Here, the focus is what to do with the figures.

When a customer pays late

The main customer now says the CHF 15,000 will be paid on 4 December instead of 19 November. Sales have not changed, but the cash will not be available for the same commitments.

Without that payment, the forecast balance drops to CHF 3,000 after salaries on 25 November, then to −CHF 5,000 on 30 November. The negative amount is a funding need. It does not mean the bank will allow an overdraft.

The business must therefore find at least CHF 5,000 before 30 November to meet planned payments. To retain a CHF 5,000 safety margin, it needs a solution covering CHF 10,000.

Ask for the right amount at the right time

The owner asks the customer to pay CHF 10,000 on 24 November and the remaining CHF 5,000 on 4 December. If the customer agrees and pays as promised, the balance rises from CHF 20,000 to CHF 30,000 on the 24th, then falls to CHF 13,000 after salaries on the 25th and CHF 5,000 after payments on the 30th.

Why request payment before salaries? To prevent the account temporarily falling to CHF 3,000 on the 25th, below the chosen safety margin.

A CHF 5,000 payment would only bring the closing balance back to zero. CHF 10,000 arriving on 2 December would be too late. The amount and date together make the solution.

Bring cash in sooner

The first opportunity often lies between work completed and money received. To act in the right place, identify where payment is getting held up.

The work is finished but the invoice is waiting

A week spent preparing the invoice delays the start of the payment period by a week. Prepare it as soon as the service or agreed milestone is completed. Check the recipient, any purchase order reference and the details needed for payment. An invoice sent to the wrong department can remain blocked even when the customer has sufficient funds.

Use our invoice checklist to avoid unnecessary back-and-forth.

The assignment is long or requires purchases

If you must advance significant costs, discuss a deposit or milestone payments at the quotation stage. For example, agree one payment on order and another when part of the work is delivered. Milestones and conditions must be clear and accepted by the customer. This avoids financing the whole assignment until the final invoice.

The invoice is overdue

A useful reminder seeks a precise answer. You could write: “Invoice X, due on 15 November, remains outstanding. Could you confirm the transfer date? If a document is missing for approval, please tell us which one.”

Adapt the next step: resend a missing document, resolve a dispute or agree a payment schedule if the customer is struggling. Record the promised amount, date and contact person. Our article on tracking customer payments explains how to organise follow-up.

Anticipate outgoing payments

Monthly salaries are usually visible. Less frequent expenses are easier to forget: annual insurance, social contribution settlements, vehicle servicing or tax due dates. Add them to the calendar as soon as known, even before an invoice arrives.

For VAT, plan payment without waiting for an FTA invoice: it does not automatically send one. The usual deadline is sixty days after the reporting period ends. If your business reports annually, its schedule includes instalments and a final balance; use the dates applicable to your arrangement. See the FTA pages on paying VAT and annual reporting, both in French.

Before a purchase, check the forecast balance after existing commitments. A supplier discount may be attractive, but that does not necessarily make the purchase affordable today. Paid but unsold inventory ties up money. An inventory review helps identify slow-moving items and orders to reduce.

Want to postpone a payment? Speak with the supplier before it falls due and obtain agreement. An unagreed delay can damage the relationship or block a delivery needed to invoice your own customers.

Hiring creates recurring payment commitments. Estimate the full cost and timing through your recruitment process before adding a new role to the budget.

How much cash should you keep in reserve?

No single number of months suits every business. A retailer paid immediately and a company waiting on three large customers face different risks.

Start with the forecast and ask: which delay or unexpected expense must we be able to absorb? Delay the largest customer’s payment, add a plausible repair or test a month of lower sales. Look at the lowest resulting balance and its exact date.

In our example, the normal forecast ends at CHF 10,000. The customer delay reduces it to −CHF 5,000. Maintaining CHF 5,000 of safety cash despite that delay therefore requires an additional CHF 10,000: CHF 5,000 to cover the shortage and CHF 5,000 to retain the desired margin. This safety threshold is an example assumption, not a recommendation for every SME.

Once payments are in the forecast, do not subtract them again when calculating the reserve. Transferring money to another company account for VAT does not increase total cash: you have merely earmarked an amount for future use.

Finally, distinguish available cash from a credit facility. A confirmed, unused facility drawable in time may cover a need, but remains potential debt with conditions and a cost.

When cash shortages keep recurring

A temporary squeeze may be resolved with a partial payment. If the same problem returns every month, find its cause before borrowing more.

• The business is growing. You buy more and pay additional salaries before receiving proceeds from new sales. This timing gap creates working capital requirements. Deposits, better inventory control or suitable growth financing can reduce or cover them.
• The business is losing money. Credit buys time but adds repayments. Work on prices, margins and expenses to stop the losses.
• An investment has emptied the account. A machine used for several years may justify financing over an appropriate term, preserving cash needed for daily operations. Compare total cost and future repayments before choosing a business loan.

If your limited company or LLC risks being unable to pay debts when due, promptly review the situation with your accountant and, where appropriate, a restructuring specialist. The Code of Obligations requires monitoring solvency and acting swiftly when it is threatened (Article 725 CO, applicable by analogy to LLCs under Article 820). A negative cash forecast does not, by itself, prove overindebtedness: that requires a separate assessment of assets and liabilities.

Your weekly cash review

Choose a fixed time each week. The person following up customers and the person approving expenses must be able to share useful information. The forecast only has value if dates stay current.

1. Replace past forecasts with actual bank movements. A promised but missing payment still needs follow-up. Verify its revised date instead of automatically postponing it by a week.
2. Find the next lowest balance. Record the date, forecast amount and funding needed to restore your safety margin.
3. Assign a verifiable action. In our example: call the customer today to secure CHF 10,000 on 24 November, then check the transfer on that date.

Review more frequently when cash is tight. A stable business may need less frequent reviews, provided major due dates are anticipated.

Where should you start?

Open your bank account and put upcoming receipts and payments in a calendar. Find the first date when the balance becomes too low. You will then know which customer to call, which expense to discuss or which financing to prepare.

If the problem persists despite those actions, have the cause analysed. Our team can connect cash monitoring with your business accounting to identify whether the pressure comes from payment delays, growth or profitability.

Sources and references

• Federal Tax Administration: VAT payments (in French).
• Federal Tax Administration: annual reporting and instalments (in French).
• Code of Obligations, Article 725 on monitoring solvency and Article 820 on application to LLCs.
• Federal SME Portal: budget planning (in French).

The French article’s sources were checked on 15 October 2026. The numerical example is fictional and illustrates cash management decisions.