Are you tired of living with “Will we make payroll?” anxiety? You’re not alone. Ask most manufacturing owners what keeps them up at night, and you’ll hear about cash flow headaches—long before machine failures or customer complaints. Let’s look at how cash flow nightmares start, what they actually do to your business, and proven strategies (from the manufacturing trenches) to kick those worries out of your head—and your books.
Why Do Cash Flow Nightmares Happen in Manufacturing?
If you’re in manufacturing, there’s a good chance your suppliers want to be paid quick—while customers make you wait. Here’s a typical scenario: you order raw materials, pay upfront or on tight terms, churn out the goods, send the invoice, then…crickets. Weeks or even months pass before payment arrives. Meanwhile, vendor bills, utility costs, and that “helpful” new equipment loan payment are all due yesterday.
Common Cash Flow Traps:
- Stretching to fulfill a big order, only to realize you’ve tied up all your cash in inventory and labor.
- A key customer pays late (again).
- Unexpected expenses: emergency repairs, rush orders, seasonal demand swings.
Real Story: “Where’s All My Money?”
We had a client—a profitable machine shop—who was baffled that their bank balance never reflected their healthy sales. Turns out, a pile of open receivables and vendor bills meant their cash flow was, as their owner put it, “All dressed up on paper and nowhere to go.” Sound familiar?
How to Fix Cash Flow—Without Selling Your Forklift
- Invoice Faster (and Smarter) Don’t wait until month-end. Send invoices as soon as orders ship. Use accounting software that triggers reminders automatically (or set calendar nudges if you’re old-school). The squeaky wheel gets paid first!
- Forecast Regularly Monthly projections help you prepare—not panic. Track upcoming payables and expected receivables. Build in some buffer for “Murphy’s Law” events: late payments and surprise repairs.
- Negotiate Payment Terms Try to get supplier terms that match your customer payment schedules. It’s not always easy, but even an extra week or two can help.
- Monitor Your Receivables Follow up on overdue invoices—politely but persistently. Don’t let outstanding receivables fester. Many manufacturers lose thousands yearly to “quietly” unpaid bills!
- Build a Cash Reserve Easier said than done, but even a small emergency fund can prevent crises. Aim for at least one payroll cycle’s worth of cash.
The Pro’s Secret Sauce: Work with a Manufacturing Accounting Pro
A CPA who knows manufacturing can help spot hidden holes, offer cash flow projections, and set you up with AR tracking processes that actually work.
The Sleep-Better Promise
Imagine a month with no “can we pay everyone?” panic. Clear forecasting, faster payments, smoother vendor relationships, and a peaceful night’s sleep—now that’s something every manufacturer deserves.
Ready to let go of cash flow anxiety? SkillBench can guide your next steps—so you sleep great and focus on making your plant thrive.
