| Question | Quick Answer |
|---|---|
| What is cash flow forecasting? | Planning when cash comes in and goes out so you do not run out before clients pay. |
| Biggest risk with Net-60 terms? | You can be “profitable” on paper but broke in your bank account. |
| Core habit to survive? | Weekly cash forecast for at least 13 weeks ahead. |
| Simple rule of thumb? | Spend based on bank balance + realistic cash-in, not on “revenue” or “signed deals”. |
| Key tools? | Basic spreadsheet, aging report, invoice process, clear follow-ups. |
Most businesses do not get killed by lack of demand. They get killed by lack of cash. Net-60 sounds harmless when you sign the contract. It feels like a cost of winning big clients. Then you hire, you spend, you deliver, you celebrate the new logo… and your bank account quietly drops toward zero while those same clients “process your invoice.” Cash flow forecasting is what stands between you and that slow, silent squeeze. It does not have to feel like finance homework. It is a calendar of your money. When you get it right, you stop guessing, you stop stressing over payroll, and you start making bolder, cleaner decisions.
Why Net-60 Payment Terms Hurt More Than You Expect
Net-60 means your client pays up to 60 days after the invoice date. That is the theory. In practice, it is often closer to 75 or 90 days, because of “processing cycles,” internal approvals, and small errors on invoices.
On paper, your business looks strong. You might see:
– High revenue
– Nice profit margin
– Healthy pipeline
But your bank account tells another story.
You pay:
– Salaries every 2 weeks or every month
– Rent every month
– Software subscriptions every month
– Ads or traffic every day
– Contractors often within 7 to 30 days
Net-60 means you are financing your client’s project for two, maybe three months, out of your own pocket. You are their bank. They do not pay interest. You carry the risk.
Net-60 turns your growth into a cash-burning race unless you forecast and plan on purpose.
When you stack multiple Net-60 clients on top of each other, the lag gets harsher. You work hard, you grow top line, you feel proud, and yet you have that tightness in your chest each time payroll hits.
The Hidden Ways Net-60 Shows Up In Your Day
You see it when:
– A big client signs, you ramp up a team, and then suddenly you are short on cash two payroll cycles later.
– You delay paying a vendor because “the big invoice is due next week.” Then the client pays 2 weeks late, and now your vendor is upset.
– You stop your own marketing because you “cannot afford it this month,” right when you need the pipeline the most.
Technically this is not always a Net-60 problem. It is a cash planning problem. Net-60 just acts like a spotlight. It shows you how fragile your timing is.
What Cash Flow Forecasting Really Is (And What It Is Not)
Cash flow forecasting is not a fancy model packed with formulas. It is a simple habit.
At its core, it is one question:
“When, exactly, does cash leave my bank, and when, realistically, does cash come in?”
Revenue is not cash. Profit is not cash. Signed contracts are not cash.
Cash is cash.
Profit feeds your ego. Cash keeps you alive.
So your forecast is just a dated list:
– How much money you have in the bank today
– What will hit the bank and when
– What will leave the bank and when
That is it. The rest is formatting.
Why You Need a Cash Forecast When You Have Net-60 Terms
When clients pay late, your brain fills gaps with hope:
“They always pay.”
“It is a big company, they will not default.”
“Accounting said it is in this week’s batch.”
Hope does not wire money. A forecast does three things instead:
1. It tells you the exact week you will dip into the red if you do nothing.
2. It shows you how deep that dip is going to be.
3. It gives you time to act before you land there.
Without a forecast, you realize you are short when your card gets declined. With a forecast, you know this problem is 6, 8, or 10 weeks away, and you still have options.
Building a Simple 13-Week Cash Flow Forecast
You do not need CFO skills. You need clarity and consistency. Let us build a basic 13-week (about 3 months) forecast. That is usually enough to cover Net-60 cycles.
Step 1: Start With Your Opening Cash Balance
Open a spreadsheet. Across the top, label the columns by week:
– Week 1 (this week)
– Week 2
– Week 3
… up to Week 13.
In the first row, put your starting bank balance. Real bank balance. Not including credit limits. Not including “checks in the mail.”
Step 2: List Expected Cash Inflows By Week
Now, one section for “Cash In.”
Look at your:
– Current open invoices
– Signed deals not yet invoiced
– Subscription or retainer clients
– Any other sources (affiliate payouts, refunds, loans, etc.)
For every invoice, write:
– Client name
– Amount
– Invoice date
– Payment terms
– Realistic payment date
Realistic is the key. If a client with Net-60 usually pays you in 75 days, use 75 days. If a client often asks for corrections, extend further.
Drop each amount into the week when you expect it to hit your bank, not when you sent the invoice.
Forecast the way your clients behave, not the way the contract reads.
If you have retainer clients paying every month, put their payments in the appropriate week for each month.
Step 3: List All Cash Outflows By Week
Now the “Cash Out” section.
Go line by line:
– Payroll (salary, wages, contractor fees)
– Rent and utilities
– Software subscriptions
– Ads, traffic, media buys
– Tax payments
– Loan payments
– Insurance
– Any recurring fees
– One-off planned expenses (equipment, events, training)
For each, drop the amount into the week when money leaves your account.
Be honest about your own behavior. If you always pay a specific bill late, and the vendor accepts it, reflect that.
Step 4: Net Cash and Ending Balance
For every week:
Net Cash = Total Cash In – Total Cash Out
Ending Balance = Prior Week Ending Balance + Net Cash
So:
– Week 1 Ending Balance = Opening Balance + Week 1 Net Cash
– Week 2 Ending Balance = Week 1 Ending Balance + Week 2 Net Cash
– And so on.
Now you have a timeline of your bank balance across 13 weeks.
Step 5: Spot the Red Zones
Scan the Ending Balance row.
– Where does it dip below zero?
– Where does it get close to zero?
– Which weeks look dangerous?
Those red or near-red weeks are your critical zones. These are the weeks Net-60 hits you hardest.
This is where strategy comes in.
Planning Around Net-60: Turning the Forecast Into Decisions
A forecast without decisions is just a spreadsheet you feel guilty about.
Once you see your weak weeks, you can start pulling levers. Some are fast. Some are slow.
Lever 1: Change the Timing of Expenses
Look at any expense that is not fixed to a date:
– Can you delay a purchase by 2 weeks?
– Can you split a one-time payment into 2 or 3 months?
– Can you pause specific tools or services for a short period?
Move those lines in your forecast and see what happens. Sometimes shifting one payment from Week 6 to Week 8 keeps your balance positive the whole quarter.
You are not cutting everything. You are matching cash out to cash in.
Lever 2: Bring Cash In Faster
Net-60 is not always as rigid as it sounds. You can often pull money in faster with simple changes.
Some ideas:
– Upfront deposits: For project work, ask for 30 to 50 percent upfront.
– Milestone billing: Break the work into stages and bill at each stage.
– Early payment discounts: Offer 1 to 2 percent discount for payment within 10 or 15 days.
– Shorter terms for new work: Ask for Net-30 on new projects even if past work used Net-60.
You will not always get what you ask for. But some clients say yes, especially if procurement or a manager also feels the cash pressure you feel.
You signed Net-60 once. You are not locked into Net-60 for every future deal with that client.
Update your forecast when these negotiations work. Track the real payment history. Tighten your assumptions as you see patterns.
Lever 3: Match Hiring and Delivery to Cash Reality
Net-60 makes it very tempting to overhire. You see big contracts, you staff up, you tell yourself, “The money is coming.”
In the forecast, try this:
– Add new hires only in the weeks after the cash for that work is scheduled to land.
– Use contractors or part-time help in earlier weeks, even if the hourly rate is higher.
– Build in lead time for new salary costs. A full-time hire is not a one-time cost. It is 12 months of commits.
Play with variants in your spreadsheet. What if you waited 4 more weeks before adding that full-time role? Can you still deliver without breaking your people?
The forecast lets you see how each new salary changes your lowest weekly bank balance.
Lever 4: Short Term Funding For Timing Gaps
Sometimes you have done everything right. You cut costs where it made sense. You pulled some cash in early. You delayed some non-critical expenses.
And you still see a small dip.
That is when you consider:
– Line of credit
– Short term loan
– Invoice financing or factoring
– Credit card float (careful with this one)
The key is to be proactive.
If your forecast shows a gap 8 weeks from now, you can:
– Approach your bank with clear numbers
– Show future invoices and contracts
– Ask for a specific, modest amount
Banks like people who know their numbers. They do not like panic requests.
Dealing With Clients Who Always Pay Late
Some clients treat Net-60 as Net-whenever. You send invoices, they respond slowly, and you spend more time chasing payments than doing work.
You cannot fix their internal systems. You can fix your process.
Clean Up Your Invoicing Process
Late payments often start with small mistakes:
– Wrong PO number
– Wrong contact
– Missing details
– Missing tax info
– Incorrect bank details
Every time this happens, your invoice hops to the back of the queue.
Tighten your process:
– Confirm billing contacts and PO rules before the project starts.
– Send invoices the same day a milestone is completed.
– Ask for written confirmation that the invoice is “approved” internally.
Treat invoicing like a deliverable. It is part of your service.
Build a Simple Follow-Up Rhythm
Relying on “They will pay” leaves you exposed.
Set a schedule:
– 7 days before due date: Polite reminder that payment is coming up.
– On due date: Short note with invoice attached again.
– 7 days after due date: Firm reminder, ask if anything blocks payment.
– 14+ days after: Escalate to a manager or procurement contact.
Keep it friendly but direct. Your tone matters. You are not begging. You are running a business.
You can also forecast based on how this client has behaved over the last 6 months. If they pay 20 days late on average, bake that into your forecast. Do not repeat the same surprise every cycle.
Repricing Chronic Late Payers
This one is uncomfortable, but useful.
When a client repeatedly pays 20, 30, 40 days late, they are using your cash as a cushion. There is a cost to you.
You can:
– Raise your price for them on future work to cover carrying costs.
– Shorten terms in exchange for holding current pricing.
– Say no to new projects if their behavior creates risk you cannot absorb.
You will not do this with every client. But it is healthy to act like someone who cares about their own survival too.
Not every client is worth the cost of carrying them for months on your balance sheet.
Using Scenarios: Best Case, Likely Case, Worst Case
Your forecast will never be exact. That is fine. The goal is not perfect prediction. The goal is to see ranges.
Set up three versions of your 13-week sheet:
– Best case: Clients pay on contracted terms. New sales close on expected dates.
– Likely case: Clients pay on their historic pattern. Deals close a bit later than you hope.
– Worst case: Some deals push out, and a couple of big invoices get paid 2 to 3 weeks late.
You do not need 20 scenarios. Three is enough.
Look at the lowest point of your bank balance in each version. That number changes how you behave.
For example:
– If worst case is still positive, you can push growth harder.
– If likely case goes negative, you need to act now.
– If best case barely keeps you above zero, you might be underpricing, overhiring, or both.
This approach takes away the story in your head and gives you numbers on a screen.
Forecasting When You Are Small vs When You Are Growing Fast
Net-60 hits small and fast-growing companies in different ways. The approach is similar. The stress feels different.
If You Are Small or Just Starting
You might think, “I do not need a forecast; my numbers are simple.” That is when you actually need it most.
A single late payment can wipe your cash cushion. One client with Net-60 can hold all your profit for two months.
At this stage:
– Avoid Net-60 if you can. Ask for Net-30 or Net-15.
– Push hard for deposits and milestone payments.
– Keep personal spending separate from business cash.
Even a simple 8-week forecast can help you avoid taking on a project that looks big but pays too late to be safe.
If You Are Growing Fast
Growth with Net-60 can feel like driving a car that accelerates well but has weak brakes.
You book more revenue. You add team members. You open new channels. Everything looks “up.”
Then one large client delays payment, and your whole house shakes.
In high growth phase:
– Extend your forecast to 26 weeks if you can.
– Add headcount changes as separate lines, including taxes and benefits.
– Model what happens if new sales slip by a month.
Fast growth often hides early warning signs. Your forecast pulls them back into plain sight.
Blending Personal and Business Cash (When You Are the Founder)
For many owners, especially of small businesses, there is no true line between “company money” and “your money.” Your savings are the backstop.
This is risky. It is also common.
If you are in this place and dealing with Net-60:
– Include any personal cash you are willing to inject as a separate line in the forecast.
– Treat founder loans like real loans with a repayment plan.
– Set a personal stop-loss number. A point where you will not put more personal cash in.
You want to protect not just your business but your life outside the business.
Your company needs oxygen. So do you. Do not suffocate one to save the other without thinking.
Key Metrics That Make Forecasting Easier
Your cash forecast connects with a few simple metrics that help you read the health of your business.
Days Sales Outstanding (DSO)
DSO is the average number of days it takes you to get paid after you invoice.
Very rough version:
DSO = (Accounts Receivable / Average Daily Sales)
You do not have to calculate it perfectly. What matters is the trend.
– If DSO creeps up from 40 to 55 to 70, your clients are paying slower.
– If DSO drops, your cash is freeing up.
Use this to adjust your forecast assumptions. Do not stick to someone’s promise; follow the trend.
Runway in Weeks
Runway is how long you can survive with your current cash if no more money comes in.
Very simple:
Runway (weeks) = Bank Balance / Average Weekly Cash Out
You probably will not go to zero revenue, but again, the trend guides you.
When Net-60 is normal in your space, you want more runway, because you are exposed to more timing shocks.
Cash Conversion Cycle
This is the full journey from:
– Spending to acquire or deliver
– To collecting cash on the work
With Net-60, that cycle stretches. You might pay staff for 2 or 3 months before you see the money for that work.
Your job with forecasting and contract structure is to shorten that cycle where you can.
Making Cash Forecasting a Weekly Habit
A forecast you build once and never touch again will go stale fast. Net-60 terms make this worse because small delays add up.
Create a weekly routine. It does not have to be long.
Your 30-Minute Weekly Cash Meeting
Schedule 30 minutes, same time each week.
Agenda:
1. Update last week with what actually happened.
2. Adjust the next 13 weeks with new data:
– New invoices
– Payments received
– New hires or expenses
– Any changes to expected payment dates
3. Scan for red or near-red weeks:
– What changed from last week?
– Do you need to pull a lever now?
4. Decide 1 to 3 actions for the week to improve the picture.
This routine does two things:
– It keeps the forecast real.
– It builds your instincts around cash timing.
After a few months, you will start to feel problems earlier, even before you see them on the sheet.
Involving Your Team
You do not need to share every number with everyone. Still, some transparency helps.
– With your sales team: Share how Net-60 terms affect your cash. Encourage them to negotiate terms or deposits where possible.
– With your delivery team: Help them understand why milestone sign-offs and timely reports matter for invoicing.
– With your finance or admin: Ask them to keep payment records tight so your forecast has clean data.
When everyone sees that “cash in the bank” is not the same as “revenue booked,” your daily decisions start to shift.
Small Practical Tactics That Add Up
Sometimes small moves give you more relief than big strategic changes.
Invoice the Moment Work Is Complete
Lots of companies finish work and then wait days or weeks to send the invoice. That delay stacks directly onto your Net-60.
Tight rule:
– If delivery finishes today, invoice today.
– If a milestone hits Wednesday, invoice Wednesday, not Friday.
Every day you wait is one more day you carry the cost.
Shorten Internal Approval Cycles
On your side, invoices often sit waiting for internal review.
If someone on your team must approve hours, timesheets, or project completions before you can invoice, shorten that loop.
Even shaving 3 to 5 days off your internal cycle helps over time, especially across many clients.
Use Simple Payment Methods
Make it easy for clients to pay you:
– Clear bank details on every invoice
– Online payment link if suitable
– Correct currency every time
– Matching PO numbers and references
You do not need an elaborate system, but avoid any reason for their accounting team to push your invoice aside.
Reframing Net-60: From Burden to Filter
It is tempting to see Net-60 only as an enemy. It is tough, but it can also act as a filter and a teacher.
– It filters which clients you want to build long term relationships with.
– It forces you to understand your cash better than most owners ever do.
– It forces you to price and structure offers based on reality, not hope.
You may still accept Net-60 contracts. Big companies often insist on it. But you can do it with open eyes:
– You know your average DSO.
– You know your worst-case cash dips.
– You know what levers you will pull when a delay hits.
Instead of Net-60 controlling your life, you fold it into your plan. You treat it like bad weather on a long drive. It is not fun. It is not fatal. It just means you drive with more care and you watch the road a little closer.
