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Hi Reader,
Are you running a business where your income is up and down? One month, you’re flying high and the next month you’re wondering if maybe you should go back to corporate for a nice steady salary…
Take one of my clients who runs a laundry service for Airbnb hosts. During tourist season, she is flying high. Revenues are up, bookings are full, and everything feels smooth. Then the off-season hits. Business slows. Revenue drops. What felt comfortable becomes a tight squeeze.
This is not just Airbnb. Think ice cream sellers, garden tool shops, or even accounting and other professional services.
There are peak periods such as tax season, summer, or tourist season and then quieter months.
The question is not whether this will happen but how to survive and thrive despite it.
Here is what good cash-flow management looks like when income is inconsistent
1. Run a 13-Week Rolling Forecast (Weekly View)
Why: A 13-week horizon highlights upcoming crunch points such as payroll, VAT, loan debit orders, and seasonal dips. It gives you enough time to act.
How:
- Start with your current bank balance.
- Include weekly cash inflows such as deposits, progress invoices, and receipts.
- Layer in weekly cash out including payroll, suppliers, rent, software, and loans.
- Re-forecast every Friday to stay on top.
Here’s a free cash flow forecast training and template
2. Tighten Your Order-to-Cash Cycle
Order-to-cash cycle: The time between delivering a product or service and receiving payment. The shorter and more disciplined it is, the healthier your cash flow.
Steps to improve it
- Keep deposits and increase them where possible. Example: 50 to 60 percent up-front, balance on delivery or milestone.
- Use milestone invoices on longer jobs. Example: 50 percent deposit, 30 percent mid-project, 20 percent delivery.
- Collections rhythm: invoice same day, set automated reminders at issue, 7 days before due, on due date, 7 days after due, and 14 days after due. Run a weekly “call list” for invoices more than 14 days overdue. Xero has built-in tools for invoice tracking.
- Change payment terms for slow-paying clients. Offer an early-payment discount or add a small premium for extended terms. For example, for corporates who are notoriously slow payers: add 10% extra then you would normally charge then give a 5% discount for early payment.
- Enforce purchase order discipline. No work starts without a PO and deposit (especially for corporates!).
- dd late-fee or interest clauses where appropriate and legally allowed.
3. Build a Cash Buffer
- Target three months of fixed costs including salaries and software within six to nine months.
- Park it in a separate buffer account to avoid accidental spending.
4. Use Financing Facilities Intentionally
- Overdrafts: Suitable for short timing gaps under 30 days. Set a ceiling and stick to it.
- Credit cards: Use only for short timing gaps. Do not use for payroll and pay off within the interest-free period.
- Purchase order financing: Consider only for large invoices. Model the cost versus benefit in your forecast first.
5. Make Owner Pay Predictable
- Set a fixed monthly drawing. Do not dip into company cash arbitrarily.
- Review quarterly and adjust only when your forecast allows.
6. Watch One Metric Every Monday
- DSO (Days Sales Outstanding): Track invoices like a hawk. Identify and follow up on overdue invoices weekly.
Running a seasonal or inconsistent business does not have to be stressful. With structured forecasting, disciplined invoicing, and intentional cash buffers, you can smooth out the highs and lows and manage quiet months just as well as the busy ones.
So where do you start?
Start taking control of your cash flow.
Grab the free 13-week cash flow training and template and get started today.
P.S. Ever had a month where money just didn’t stretch?
Hit reply - I’d love to hear how you managed it.
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Want to work with me?
There are a few ways I can help:
- I offer anxiety relief for monthly accounting and tax compliance - Let me know
- Would you like to work with me one on one to improve your business financial performance? 10 Coaching slots now open. - Set up your discovery session now
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Until next time,
Praneeta
