Cash flow problems rarely show up labeled as cash flow problems. They show up as missed contracts, slow payroll runs, and decisions you wouldn't make if you weren't tired.
Most operators sense pressure on cash flow for at least a quarter before they call. Here are the five symptoms that tend to appear first, well before the bank statement makes it obvious.
Not because the work is unprofitable, but because you cannot fund the ramp-up. New crews, new equipment, and new inventory all have to be paid before the customer pays you. If you are declining good work to protect cash, the constraint is capital, not demand.
In a healthy business, payroll is not a recurring source of stress. If you are checking the bank balance the night before, or moving money between accounts to cover it, the ratio between AR and operating cash is wrong.
It's normal to have receivables. It's not normal for the 60+ bucket to be larger than the 30-day bucket. When it is, the customer mix has shifted toward late payers, and the slowest customers are effectively financing your growth on terms you never agreed to.
Offering 2/10 net 30 is fine as a deliberate strategy. It becomes a problem when it is only a way to accelerate payment, because you give up margin you would otherwise keep.
When operators say the bank would not help anyway, it usually means the relationship has gone cold or the line is fully drawn. Both are reasons to look at receivables-based financing, which is underwritten on the debtor rather than the bank relationship.
If two or more of these apply, a short conversation can size the situation. At worst, you confirm the gap is smaller than expected; at best, payroll stops being a recurring problem.
If your customers take 30, 60 or 90 days to pay, factoring advances working capital against those invoices, so you don't wait on the payment cycle to operate.
Two tools, two different jobs. The wrong choice won't sink the business, but it can cost months and a contract you could have taken.
