3 Cashflow Safety Nets to Use in a Crisis

Over the years, Viewridge has helped hundreds of companies pivot toward profitability by solving cash crunches in various industries. The biggest factor of success is the time before the cash crunch hits. The more time you have to prepare for an upcoming situation, the better equipped you are to potentially avoid the problem.

While there are three main safety nets regarding cash flow impact, a forward-looking Cash Flow Forecast is the most essential element to implement. It functions as an early warning system for when money will run out and can help you make strategic decisions about what activities need funding or furloughing.

Looking ahead at least six to eight weeks into the future, on a week-by-week basis, is recommended. As every business owner knows, not all weeks are created equal. There are different weekly expenses such as rent one week a month, payroll two alternating weeks a month, etc.

And if uneven outflows weren’t enough, revenue never seems to match it. Clients rarely seem to care when an invoice is due. Even if your payment policy is 10 or 15 days, clients convince themselves they have until the end of the month to pay. And as the end of the month approaches, struggling clients start asking themselves “which bills really need to be paid?”

Because of these factors, it’s crucial to create a Cash Flow Forecast that will tell you, as far in advance as possible, when you might face a cash crunch. 

When your Cash Flow Forecast helps you identify an upcoming cash crunch, you have options to deal with the looming problem. Here are the three main safety nets you can utilize to help find the right solution for your company.


The best way to avoid a financial crunch is by using your credit cards. This may seem like an expensive option, but if you have available and reliable funds on hand for emergencies it can be worth the expense of carrying one or two more charge accounts than necessary each month.

  • If you have available credit, shift expenses to the card to avoid your crunch.
  • Make a lower payment on your credit card if you have room after ensuring that needed charges won’t be declined.
  • Inquire about having your credit limit raised.
  • Get new credit. When you apply for most cards, you get an immediate answer. Many companies will even give you a temporary number so you can make charges until your permanent card arrives.

A Business Line of Credit (LOC) through a lender is also a helpful tool. Companies should have a business line of credit whether it’s needed or not. Think of it as insurance, securing the LOC before it’s necessary is a great way to protect your business from the risk of failure. It’s a best practice to secure a LOC as early as you can, use it to keep it current, and as your business grows, don’t be afraid to ask to increase it. If your business is small, you may need to put a personal guarantee on the LOC.


The most obvious way to solve a cash crunch is to cut down current expenses wherever possible.

  • Ask yourself what isn’t necessary for your company to continue operating.
  • Shift moveable expenses – you can use your Cash Flow Forecast to identify what expenses can be delayed without missing due dates.
  • Change your salary, draw, or distributions if possible. Consider whether you need all the money you planned to take home. Sometimes it’s better to leave money in the company, but only if it won’t cause a significant hardship at home.


The quicker money begins flowing into your business, the sooner your cash flow problems will be solved.

  • Try to speed up your receivables by offering additional products or accepting pre-orders for a product before it hits production.
  • Ask new customers for a deposit or partial payment up-front, rather than billing the entire amount due in a single invoice.
  • Send invoices more frequently. Instead of waiting for the full completion of a job to send an invoice, generate invoices every week or every two weeks to cover the services delivered up to that point. The sooner you send an invoice, the sooner you will receive payment.
  • Focus on your past due accounts. Scour your accounts receivable for past due clients and start making phone calls. You can ask past due clients for even partial payment. In a cash flow crisis, every cent counts.

As you can see, there are several avenues that can help thwart a cash crunch. The solution is usually a mixture of the three; there isn’t typically a single magic fix.