The short answer
When cash is tight, fix it in this order: pricing, costs, working capital, then debt. A business operator’s step-by-step plan, with real numbers.
In short: When cash is tight, work through four things in order: your pricing, your operating expenses, your working capital (how fast money comes in versus goes out), and your debt and leases. Most owners jump straight to cutting costs or chasing more sales. Start with price and the timing of cash, because that’s usually where the biggest, fastest wins are.
Prefer to watch? The 60-second version is on YouTube.
There’s been times in Elephant where I’ve had to go home to my wife and say, “The business is going through a bad period. I can’t distribute income for the next 6 months. I just need to hold and pause.” That’s the brutal one. Cash pressure doesn’t stay in the business. It comes home with you.
So, if cash is tight for you right now, here’s exactly how I’d tackle it.
Why is my small business always short of cash?
Short-term cash pressure in business is brutal. And as I say in the video, “not having cash flow and not having cash in the bank is the primary driver of business collapse.”
But here’s the thing. “There is reason it occurred and it probably didn’t occur today. It may be months or years ago you made different decisions.” Maybe you hired ahead of revenue. Maybe you haven’t moved your prices in three years. Maybe you took on a big client with 60-day terms.
So before you cut staff, move to a smaller warehouse or change the product, stop and work out the cause. If you profit but never have cash, start with why profit isn’t cash.
Step 1: Are you pricing correctly?
This is always where I start. If your price is wrong, every job you do makes the cash problem a little bit worse.
Let’s use a real business I’ve walked through on the whiteboard. 75 jobs a year at $8,000 each. That’s $600,000 in revenue. Their costs were going up about 8% a year, and their prices weren’t. Raising prices around 18% on the same 75 jobs took profit from $117K to $202K. Same work. Same team. $85K more.
No cost-cutting exercise gets you that. Most businesses we work with are underpriced when they start, often 80 to 90% of them. More on how to do it without losing your good clients in when should you raise your prices.
Step 2: Which costs aren’t giving you a return?
You’ll have a ton of expenses in your business. Software, subscriptions, a marketing agency, the second car, the bigger office. For each one, ask: are we getting a return?
If you’re not, “you have to ruthlessly look at if you can cut that cost.” Not the people doing the work. The stuff nobody’s checked in two years.
Go line by line through the last three months of your P&L. Most owners find a few thousand a month they forgot they were paying.
Step 3: How fast does cash come in versus go out?
This is your working capital, and it’s the one most owners never look at. Put simply: are you collecting money fast enough to pay what’s going out?
Let’s work it out on that same $600,000 business. That’s about $1,650 of revenue a day. If clients pay you on average 60 days after the job, you’ve got roughly $100,000 sitting in other people’s bank accounts. Get that down to 30 days and you free up about $50,000. Cash you already earned.
Things to check:
Debtors. Who owes you, and how late are they? Give every overdue invoice an owner and ask for a payment date.
Deposits and progress payments. Can you bill 30 to 50% upfront, or at milestones, instead of at the end?
Creditors. Are you paying suppliers in 7 days when your terms are 30? Use the terms you’ve got.
Stock and work in progress. Cash sitting on a shelf or in an unfinished job is cash you can’t use.
Step 4: Can you change your debt or leases?
The last thing to look at is your liabilities. “Do you have large leases? Do you have debt in your business that you can change or restructure?” Stretching a loan term, refinancing equipment or renegotiating a lease won’t fix a broken business. But it can buy you breathing room while you fix the first three.
Should you protect margin or cash while you’re growing?
If you’re growing hard, protect cash first. “Think about cash and cash balance. You don’t want to run dry in your business.”
Growth costs. You hire ahead of revenue, you fund jobs before you get paid. That’s fine, if you planned for it. Where it goes wrong is when “people put expenses in the business to grow, and really, they don’t change your price.” More clients at the old price, plus a bigger cost base, plus slower collection, is how a business turning over $2M ends up with nothing in the bank.
How do I keep cash flow on track every week?
Put it in your weekly rhythm. Fifteen minutes every Monday:
Cash in the bank today.
What’s coming in over the next 4 weeks.
What’s going out over the next 4 weeks, including GST, PAYG and super.
The three biggest overdue invoices and who’s chasing them.
Not sure if cash is your biggest constraint, or just the symptom? Book a free diagnostic call and we’ll work out where to start.
Frequently asked questions
What is the fastest way to improve cash flow?
Chase overdue invoices and ask for deposits or progress payments on new work. Both bring in cash you’ve already earned, usually within weeks.
Should I cut costs or raise prices first?
Check pricing first. A price rise on work you already do goes almost straight to profit and cash. Then cut costs that aren’t giving you a return.
How do I improve cash flow without getting a loan?
Work the first three levers: price correctly, cut costs with no return, and shorten the time between doing the work and getting paid. Debt is the last lever, not the first.
How many weeks of cash should a small business keep?
A common rule of thumb is two to three months of operating expenses. If you’re growing fast or your income is lumpy, hold more.
Why is my business profitable but has no cash?
Profit and cash run on different timetables. Money gets stuck in debtors, unbilled work, stock, tax and loan repayments. Read why profit isn’t cash.
Can a business adviser help with cash flow?
Yes, if they help you build the forecast and fix the cause, not just tell you to cut costs. Talk to your accountant about the numbers, and see what kind of outside help suits you.
Key takeaways
Fix it in order: price, costs, working capital, then debt and leases.
Most cash problems didn’t start today. They started with a pricing or growth decision months ago.
Getting paid 30 days faster on a $600,000 business frees up about $50,000.
Don’t make big reactive decisions under cash pressure until you know why the cash dried up.
Last updated: 2 November 2026.
Leader of the herd. Shehan's career has spanned professional services, finance, banking, and strategy. He started Elephant to connect busy, ambitious people with the proactive financial advice they need to make great life decisions. He built the kind of firm he always wished existed - and then showed up in trackie-dacks to run it.
