Blog · Territory, capacity and quota planning · Finance and FP&A teams
Poor cash flow management often appears as missed collections, unplanned purchases, or clustered payments. Trace a cash shortfall from a reconciled weekly workbook to overdue invoices and payment variances, then assign the next action.
Poor cash flow management shows up when a company cannot explain or anticipate the gap between money collected and money paid. Start with reconciled cash movements, compare them with the forecast that existed before the period, and trace each difference to its underlying invoice or payment. A low balance is the symptom; the rows explain the cause.
Bring the bank transactions and cash ledger for the same period, an accounts receivable export, the payment register, and the forecast saved before the week began. Include inventory purchase records when supplier payments explain the shortage. Keep invoice IDs, due dates, expected collection dates, settlement dates, and amounts in the exports.
The SBA's guidance on managing business finances identifies accounts receivable, accounts payable, available cash, bank reconciliation, and payroll as responsibilities that need an owner. For this diagnosis, finance reconciles the cash, collections confirms customer commitments, and purchasing explains supplier spending.
Use one currency and one reporting boundary. Remove transfers between included bank accounts from receipts and payments. Record the cutoff explicitly so a payment cleared after the period does not appear in the wrong week.
Consider an illustrative Ohio distributor for the week ending October 9, 2026. All amounts below are USD. Receipts are positive; payments are negative. The opening balance agrees with reconciled cash, and no financing or investing movements occurred during the week.
| Cash line | Forecast (USD) | Actual (USD) | Actual minus forecast (USD) |
|---|---|---|---|
| Collections from current customers | 220,000 | 205,000 | -15,000 |
| Collections from past-due customers | 120,000 | 75,000 | -45,000 |
| Inventory supplier payments | -150,000 | -175,000 | -25,000 |
| Payroll | -100,000 | -100,000 | 0 |
| Rent and overhead | -40,000 | -40,000 | 0 |
| Tax payment | -20,000 | -30,000 | -10,000 |
| Net cash movement | 30,000 | -65,000 | -95,000 |
| Opening cash | 80,000 | 80,000 | 0 |
| Closing cash | 110,000 | 15,000 | -95,000 |
Put the headings in row 1 and the six movement lines in rows 2 through 7. In Excel, enter the variance in D2 and fill down:
=C2-B2
The net movement in B8, copied across to C8, is:
=SUM(B2:B7)
Opening cash goes in row 9. Closing cash in B10, copied across, is:
=B9+B8
Actual receipts are $280,000 and payments are $345,000, producing the $65,000 decrease. The forecast expected $340,000 of receipts and $310,000 of payments. The $95,000 closing miss consists of $60,000 fewer receipts and $35,000 more payments, with no unexplained remainder. These dollar calculations are exact; no rounding is needed.
The FDIC and SBA's Managing Cash Flow participant guide distinguishes historical actuals from forward-looking projections. Preserve that distinction here: overwriting the original forecast with actual results removes the evidence of what the team failed to anticipate.
The past-due collection forecast covered these three invoices. They were all outstanding at the start of the week; assume no credit memos, write-offs, or other adjustments during the week.
| Invoice | Due date | Opening balance (USD) | Collected during week (USD) | Remaining balance (USD) | Days overdue at October 9 |
|---|---|---|---|---|---|
| A | September 28, 2026 | 45,000 | 30,000 | 15,000 | 11 |
| B | September 29, 2026 | 50,000 | 25,000 | 25,000 | 10 |
| C | September 30, 2026 | 25,000 | 20,000 | 5,000 | 9 |
| Total | 120,000 | 75,000 | 45,000 |
In a separate sheet, put these headers in row 1 and invoices in rows 2 through 4. Remaining balance in E2 is =C2-D2, filled down. Set H1 to =DATE(2026,10,9) rather than using a changing current date.
Calculate days overdue in F2 and fill down:
=IF(OR(B2="",E2<=0),"",MAX(0,$H$1-B2))
Sum overdue balances with valid due dates:
=SUMIFS(E2:E4,B2:B4,"<"&$H$1,B2:B4,">0")
That returns $45,000, exactly the past-due collection miss. Microsoft's SUMIFS documentation explains how matching criteria select the amounts to sum. Missing due dates need a separate exception list; they should never quietly count as current invoices. Covirage is not affiliated with Microsoft.
The team collected 75,000 / 120,000 = 62.5% of this opening overdue pool. That percentage describes this specific pool, not total company collection performance. Use days sales outstanding for the broader receivables measure.
Invoice B has the largest remaining balance, so collections should confirm its dispute status and a documented payment commitment. Moving it into next week's forecast without evidence repeats the same error. Investigate the separate $15,000 current-customer miss with the same invoice-level method.
Purchasing should explain the $25,000 supplier overrun: an approved inventory build, a price increase, an early payment, or an unplanned order require different responses. Review quantities and purchase commitments before assuming inventory can be reduced. The cash conversion cycle gives the wider relationship between inventory, customer collections, and supplier terms.
Finance should compare the $10,000 tax variance with the payment calendar. An omitted scheduled obligation is a forecasting problem even if the payment itself was correct. Update the cash flow forecast with confirmed dates and use the 13-week cash flow layout to check whether the same pressure returns.
Bring a sample of your own cash ledger, receivables export, payment register, and saved forecast in a reconciled workbook; Covirage maps the columns, and its tools compute and check the differences. The external AI model explains the results with every figure traced to its rows, so you can evaluate a cash flow management system against an explainable shortage. Create a free Covirage account and set up your business with a sample of your own data.
See Covirage for finance teams for the supporting finance workflow.
Yes. Revenue can be recognized before customers pay, while inventory purchases and payroll require cash earlier. A profitable company can therefore face a cash shortage. Reconcile receipts and payments separately from the income statement to identify the timing gap.
Repeated unexplained differences between forecast and actual cash are a useful warning. Check whether overdue invoices keep moving into later forecast weeks, supplier payments arrive unexpectedly, or the reported cash balance has not been reconciled to bank activity.
Review agreed due dates before changing payments. Paying earlier than necessary can consume cash, but paying late without agreement can disrupt supply or breach terms. Discuss revised dates with suppliers and reflect confirmed changes in the forecast.