End-of-Summer Cash Flow Checkup: Is Your Business Ready for the Second Half of the Year?
7 Steps to a Stronger Cash Flow Checkup Before Year-End
For some businesses, the past few months have been packed with projects, customers, and long days. For others, summer is a slower period that requires patience and careful planning until activity picks up again in the fall.
Either way, August is a good time to take a closer look at cash flow.
With several months left in the year, upcoming expenses may already be coming into view. Payroll, inventory, equipment needs, taxes, insurance, seasonal hiring, and year-end purchases can all put pressure on available cash.
An end-of-summer cash flow checkup can help you see where you stand, what’s coming next, and whether you have enough flexibility to handle it.
Here’s where to start.
1. Compare Summer Revenue With Cash Collected
A busy summer can feel like a successful summer, but revenue and cash aren’t always the same thing.
If you completed work in June and July but customers won’t pay those invoices until August or September, the business may be doing well while cash remains tight.
Start by looking at the money that has actually come in. Then compare it with:
- Completed work that hasn’t been invoiced
- Outstanding customer invoices
- Past-due accounts
- Deposits or scheduled payments you expect to receive
Pay attention to timing. Knowing how much is owed to your business is useful. Knowing how much is likely to arrive before your next major expense is even more important.
Good business cash flow management starts with understanding when money will be available, not just how much revenue you’ve generated.
2. Map Expenses Through Year-End
Make a list of expected expenses through the end of the year, including:
- Payroll and employee benefits
- Inventory and materials
- Rent and utilities
- Insurance and taxes
- Marketing
- Equipment maintenance or repairs
- Seasonal staffing
- Debt payments
- Planned year-end purchases
Then put approximate dates next to the larger expenses.
You may discover that several costs are likely to hit during the same month. That doesn’t necessarily mean there’s a problem, but identifying any overlaps now gives you time to prepare instead of reacting when bills arrive.
It can also help to separate fixed obligations from expenses you can delay or adjust. That distinction gives you a clearer sense of which costs require cash and where you still have flexibility.
3. Think About What Fall Will Require
Your fall expenses may look very different from your summer expenses.
A retailer may need to buy inventory well before the holiday shopping season. A contractor may be preparing for a busy stretch of fall projects. A seasonal business coming off its peak may need enough cash to cover expenses as revenue begins to slow.
This is where seasonal business cash flow deserves particular attention.
Take a look at what happened during the same period last year. When did revenue rise or fall? Were there months when major purchases or other expenses made cash tighter than expected?
Historical patterns don’t always predict exactly what will happen this year, but they can help you spot expenses or timing gaps that are easy to overlook.
If seasonality plays a major role in your business, our guide to planning for the year ahead without overextending offers additional ways to prepare.
4. Check Your Equipment
After a busy summer, take a look at the equipment you relied on and where it may have fallen short.
A vehicle that spent extra time in the shop, a machine needing more upkeep, or aging equipment slowing production are all worth a second look.
If you know an upgrade or replacement could be coming before year-end, include it in your forecast now.
Then think about how you would pay for it. Using cash may make sense in some situations. In others, financing a longer-term asset can help you avoid pulling a large amount of money out of the business at once.
Our guide to working capital vs. equipment financing explains how the two options can serve different business needs.
5. Build a Business Cash Flow Forecast
A business cash flow forecast doesn’t have to be complicated. Start with the cash available today, then estimate expected inflows and outflows by week or month through the end of the year.
Be realistic. Don’t assume every customer will pay on the earliest possible date. Don’t leave out a known expense because the exact amount hasn’t been determined. Use reasonable estimates and update the forecast as better information becomes available.
Maybe October is the month when a large inventory purchase overlaps with payroll. Perhaps several major customers typically pay near the end of the month while expenses arrive earlier.
6. Decide How Much Cash You Want to Keep Available
You may have enough cash to cover your expected expenses and still be uncomfortable with how little would remain afterward.
Think about how much liquidity you want to maintain for the unexpected.
A major repair, delayed customer payment, or new opportunity could require cash quickly. If most of your available funds are already committed, your options may become limited.
There isn’t one reserve amount that works for every business. What matters is making the decision intentionally.
Instead of asking, “Do we have enough cash to pay for this?” it may be more useful to ask, “How much cash will we have left after we pay for it?”
7. Identify Potential Cash Flow Gaps Early
By the end of your checkup, you should have a better idea of whether the business is positioned comfortably for the months ahead.
If you see a potential shortfall, you still have time to consider your options.
You might accelerate invoicing and collections, adjust the timing of a purchase, or spread certain expenses out. You may also decide that using financing makes more sense than drawing down the cash you want available for daily operations.
That’s where working capital financing can help. Rather than pulling from cash reserves to cover every short-term expense, it can preserve available cash for unexpected costs and opportunities. It also provides additional funds for payroll, inventory, supplies, and other operating needs and helps bridge the gap between when expenses are due and when revenue is collected.
Identifying that need early gives you time to make a deliberate decision instead of looking for cash after a shortfall has already arrived.
End-of-Summer Cash Flow Checklist
- Line up cash actually collected against what’s still outstanding or not yet invoiced
- Chart the rest of the year’s expenses, flagging months where several land at once
- Note any equipment issues from summer that could require a fall upgrade
- Put a number on your year-end forecast, and decide how much cash to keep in reserve
- Flag any gap now, while there’s still time to plan around it
Give Your Business a Stronger Finish to the Year
No forecast will predict every expense or nail down exactly what revenue looks like in December. What a checkup like this gives you is a clearer view of what’s likely ahead, early enough to act on it.
If your forecast shows that upcoming expenses could put pressure on available cash, Blue Bridge Financial can help you explore your options.
Review your upcoming cash needs and apply for working capital financing with Blue Bridge Financial today.
