Most cash crises do not arrive out of nowhere. They build quietly through delayed invoices, creeping expenses, and weak forecasting. Founders often assume that more sales will fix everything, but growth can actually make cash tighter if working capital is unmanaged. The real reason small businesses run out of cash is a combination of timing mismatches and lack of visibility.

Timing mismatches show up in three places. First, receivables: invoices go out late or with errors, customers take 45 days to pay, and follow-ups are inconsistent. Second, payables: vendors are paid faster than necessary, deposits are made before revenue is secured, and subscription creep eats margins. Third, inventory or project spend: materials are purchased upfront while revenue arrives later.

Visibility problems amplify these issues. Without a 13-week cash forecast and weekly variance review, the team cannot see dips coming. Budgets are not tied to actuals, so spend drifts upward. Sales targets are disconnected from collection timing, leading to a false sense of security.

Preventing cash crunches starts with invoicing discipline. Invoice immediately upon delivery milestones, make payment terms explicit, and automate reminders. Offer small discounts for early payment if cash is tight. Next, implement a basic collections rhythm: weekly review of aging receivables, clear owner, and a friendly cadence of reminders before escalation.

On the outflow side, use full vendor terms, batch payments twice monthly, and require approvals for new subscriptions. For inventory-heavy businesses, watch turn rates and avoid overbuying slow movers. In project work, request deposits and milestone payments to align inflows with work effort.

Layer in visibility. Maintain a rolling 13-week cash forecast, updated every week with actuals and revised assumptions. Flag weeks where cash dips below a set threshold and decide actions early—pull collections forward, push nonessential spend, or secure a short bridge.

Finally, create a simple cash dashboard: current balance, projected low point, days sales outstanding (DSO), and top five overdue invoices. Review it every week. Cash health improves when it is managed intentionally, not reactively. With better timing and visibility, most small businesses can avoid the panic of running out of cash.