Vinu: Manu, my biggest fear is running out of cash. How do I prevent that?

Manu: Simple—plan your cash flow in advance, not after problems arise.

Vinu: What exactly is cash flow planning?

Manu: It’s estimating cash inflows and outflows month by month.

For example:

Expected collections ₹15 lakh,

Payments ₹18 lakh → shortfall ₹3 lakh.

You must identify this gap early.

Manu: Exactly. A cash flow forecast for at least the next 3 months.

Manu: Customer collections, advances, and any other income.

Be realistic—don’t assume all ₹20 lakh receivables will come on time.

Vinu: And outflows?

Manu: Fixed expenses like rent ₹50,000, salaries ₹3 lakh,

variable costs, loan EMIs ₹2 lakh, and supplier payments.

Vinu: What if I see a deficit in advance?

Manu: Then you act early—

speed up collections, delay non-critical payments, or arrange short-term funding.

Vinu: How much buffer should I maintain?

Manu: At least 1–2 months of expenses.

If monthly outflow is ₹10 lakh, keep ₹10–20 lakh as a safety cushion.

Manu: They focus on profit, not timing of cash. Even profitable businesses fail due to poor timing.

Vinu: How often should I review this?

Manu: Every month—ideally every week if cash is tight.

Vinu: Final takeaway?

Manu: Cash flow planning doesn’t increase profit—but it ensures your business survives long enough to earn it.

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