Profitable but Broke? Why Your Shop Needs a 13-Week Cash Flow Forecast | Ep. 58

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What good is a record quarter if you can’t make payroll? It’s an uncomfortable question, especially when your shop is busy, your margins are healthy, and your financial statements say you’re making money. But you’ve already paid for the material, covered the labor, and shipped the parts. Your customer might not pay you for another 90 days. How much more business can you afford to take on while you wait?

That gap between earning money and collecting it can put even a successful manufacturer in a difficult position. I’ve felt it firsthand. This year, payment-term changes involving four of my six largest customers created a seven-figure swing in cash flow. The work was still there. The bills were still due. But the cash we expected to collect was getting pushed further out. Forecasting gave me time to see the problem coming and work through solutions before we hit it.

In this episode of Buy the Numbers, Andy Wiegand of Peninsula Capital joins me to walk through the 13-week cash flow forecast: what goes into it, where to start, and how to make it useful. We discuss tracking customer collections, vendor payments, and payroll, along with why an early conversation with your bank can give you options that a last-minute request simply can’t.

We also explore the decisions this forecast helps you make when things are going well. Can you afford that new machine? Should you pay down your line of credit? Is the business ready to fund an owner distribution—or does that money need to stay in the shop a little longer?

Every one of those decisions affects your ability to meet the next obligation. If you’re making them based on today’s bank balance, how much of that balance is already spoken for?

What’s Covered in this Episode

• (0:00) Why bad news about a late payment never ages well
• (1:53) Andy Wiegand and the small manufacturers Peninsula Capital backs
• (3:54) Great margins and no cash: why revenue and profit don’t pay vendors
• (5:09) Four customers changed payment terms this year, and what it did to my cash
• (9:10) How CLA helps you tap into millions in revenue and cost savings
• (9:49) What a 13-week cash flow forecast is and why it comes first
• (14:15) Breaking down the 13-week cashflow: collections, vendors, and payroll
• (19:59) Your buyers have technical questions. Navu delivers accurate answers at navu.co/makingchips
• (21:11) Debt payments that never show up on your P&L
• (23:30) Rent, utilities, property tax, and insurance, and when they actually hit
• (26:17) It’s a living document that must be updated every week
• (27:34) Keep your spindles running with the Hennig Workflow automation system
• (28:24) What to do when the number goes negative: early pay, your bank, your landlord
• (35:15) Borrowing base, the 90-day exclusion, and getting carve-outs
• (39:13) How Kennametal helps manufacturers cut faster and run longer
• (40:02) Using the forecast to pay down your line, plan capex, and time distributions
• (45:49) Why 13 weeks is the right window for a manufacturer
• (48:26) Where to start: how shipments convert to cash

Resources Mentioned

• Manufacturers can tap into millions in revenue and cost savings with CLA
• Give your website visitors reliable, accurate answers in real time with Navu
• Work ahead of your machine and keep the spindles cutting with the Hennig Workflow Automation System
• Cut faster, run longer, and get more out of every setup with Kennametal

Connect with Andy Wiegand

• Peninsula Capital