When conditions tighten, margin is rarely the first point of failure. Liquidity is. If your bank lines are already heavily utilised, small drifts in DSO or inventory can break headroom faster than most teams expect.
This article is a short, operational playbook. The objective is simple: regain cash control, protect credibility, and keep funding options open before urgency dictates bad decisions.
A liquidity accident is a mechanism, not a surprise
Most liquidity accidents follow the same chain reaction:
Cash out speeds up: costs, suppliers, unplanned capex
Cash in slows down: collections drift, disputes rise, billing slips
Working capital drifts: inventories build up, lead times lengthen
Banks tighten: processes slow down, renewals become conditional
The problem is timing. If your facilities are already tight, you cannot absorb timing shocks.
The early warning signals
Watch for these signals. If you see two or three, treat it as real exposure:
No disciplined 13-week cash forecast, or one that is not updated weekly
Customer concentration in receivables
Inventory rising without a clear operational driver
Facilities above 80 to 85% utilisation
Covenants resurfacing, even informally
More time spent talking to banks than on the underlying drivers
The 10-day playbook
Days 1 to 2: build a real 13-week cash forecast
Not a budget. A weekly cash forecast for the next 13 weeks, updated every week, owned by one person.
Receipts by key customer with realistic timing
Payments by supplier category, plus payroll, taxes and leases
Clear headroom view across all facilities, including conditional lines
Objective: identify the lowest cash point and the week it happens.
Day 3: run a quick stress test
Do not over-model. Run three simple scenarios:
+10% energy and logistics impact where relevant
+7 days DSO drift on key customers
+5 days inventory drift where lead times are uncertain
If a scenario wipes out your headroom, act immediately.
Days 4 to 5: freeze and protect
Freeze what does not protect cash in the next 90 days. Protect what prevents revenue collapse.
Freeze discretionary capex and non-critical projects
Protect maintenance, production stability, and critical supply continuity
Days 6 to 7: stabilise behaviour
Liquidity comes down to how suppliers and customers behave.
Suppliers: negotiate terms and volumes, segment by criticality
Customers: tighten billing, resolve disputes faster, chase the largest receivables every week
Days 8 to 10: prepare your options
Do not wait until it is urgent. Make the company financeable.
Prepare a clean lender pack: narrative, EBITDA-to-cash bridge, working capital drivers, 90-day plan
Build a single data room with consistent numbers
What not to do
Wait until you are forced to ask for money
Approach lots of parties without clean information
Pile up short-term fixes that weaken the financing structure
Conclusion
In difficult periods, CFOs do not win by predicting markets. They win by protecting liquidity, maintaining credibility and keeping options open. If your lines are already tight, the time to act is before the accident, not during it.
We can share a one-page 13-week cash forecast template and a simple stress test grid, designed to pinpoint your cash break point within 30 minutes.
Further reading
Facing a similar situation?
Let’s talk in confidence. A first, no-obligation conversation to assess what can still be financed.