The Six-Month Cash Lock-In

What a marathon teaches about cash

Experienced marathoners know the most dangerous moment of the race is not the final miles. It is the stretch in the middle after a bad patch, when a runner sees the goal time slipping and decides to win it back with a surge. The body carries a limited store of fuel. Every surge burns it faster than steady running does, and the bill arrives later, usually somewhere around mile twenty, when the runner hits the wall and the pace collapses. The runners who finish strong are rarely the ones who never had a bad patch. They are the ones who refused to chase it. They returned to an even pace, managed their fuel, and saved the real effort for the final miles.

Cash is a company's fuel, and owners who have taken a hit to it, through a lost customer, a margin squeeze, or a growth push that ran ahead of funding, tend to surge. They chase revenue with discounts, take on work at thin margins, and launch new initiatives to make up the gap. Each of those moves burns cash before it produces any. The company runs harder and gets closer to the wall.

The better response is the experienced marathoner's: return to a sustainable pace, protect the fuel, and commit fully once the company is back in control of its numbers.

Why revenue goals are the wrong goals right now

Revenue is the number most owners track and the one most teams are rewarded on. It is also the number least connected to whether the company can pay its bills in March.

Revenue growth often consumes cash. New sales create receivables that will not be collected for weeks. More volume requires more inventory and more people, paid for before the customer pays. Discounts used to hit a revenue target reduce margin on every unit. A company chasing a revenue number can grow its way into a cash shortage, which is exactly why so many growing businesses run short.

For the next six months, set cash goals instead. Revenue still matters, but it becomes an input, not the scoreboard.

Set four cash targets

A cash lock-in works when the targets are few, specific, and visible. Most owner-led companies need only four:

1. A minimum cash floor. The balance the company will not go below, expressed in weeks of operating expenses. Every major decision is tested against it.
2. Days sales outstanding. How long it takes, on average, to collect from customers. Set a target lower than today's and assign someone to own it.
3. Inventory days or work in progress. How much cash is sitting on shelves or in unbilled work. Set a ceiling.
4. A gross margin floor. The minimum margin the company will accept on new work. No deal below it without the owner's explicit approval.

Write the four numbers down with today's baseline next to each. Those numbers, and nothing else, define a successful six months.

Build the scoreboard: a 13-week cash forecast

Annual budgets are too slow to steer by, and the bank balance only shows the past. The tool that makes a cash lock-in work is a rolling 13-week cash forecast: every expected receipt and payment, week by week, for the next quarter, updated every week.

It does not need to be sophisticated. A spreadsheet is enough. What matters is that it is honest, that it is updated on the same day each week, and that the owner reads it. Within a month, most owners can see shortfalls six to eight weeks before they arrive, which is early enough to do something about them.

Pair it with a standing 30-minute cash meeting each week. The agenda is the same every time: where cash landed against the forecast, where the four targets stand, and which decisions this week affect them.

Where the cash is hiding

Most owner-led companies have more cash available to them than they think. It is simply tied up in places nobody has been asked to watch.

• Receivables. Invoice the day work is delivered, not at month end. Take deposits on larger jobs. Follow up on overdue accounts on a fixed schedule, and make someone responsible for it.
• Inventory. Slow-moving stock is cash on a shelf. Clear it, stop reordering it, and set reorder points based on actual demand rather than habit.
• Pricing. Some customers and products cost more to serve than they pay. Identify the lowest-margin work and reprice it, restructure it, or let it go.
• Overhead. Subscriptions, contracts, and recurring costs accumulate quietly. Review every recurring payment once and cancel what no longer earns its place.
• Payables. Negotiate terms that match how the company actually collects. Do not stretch suppliers to the point of damaging the relationship; that trades a cash problem for a supply problem.

None of these require new revenue. All of them release cash the company has already earned.

What to stop doing for six months

Locking in on cash means saying no to things that feel productive but drain working capital:

• Discounting to hit a revenue target.
• Taking on large new customers on long payment terms without a deposit.
• Buying ahead on inventory because the price looks good.
• Launching initiatives that require investment before they generate a return.
• Making distributions or major purchases that push the company below its cash floor.

Some of these may be the right decision later. For six months, they wait.

The owner sets the standard

A team treats cash the way the owner does. If the owner glances at the bank balance once a month and approves exceptions freely, the targets will drift within weeks.

During a cash lock-in, the owner reads the forecast every week, knows the four numbers without looking them up, and asks one question of every significant decision: what does this do to cash, and when? Asked consistently, that question changes how the whole company thinks about money.

A six-month plan for locking in on cash

A company does not run out of cash in a day. It runs out over months in which nobody made cash the priority.