How to Manage Cash When Funds Are Short

Staring at your cash flow report and watching the runway shrink can feel overwhelming— but even in these stressful moments, there are steps you can take to feel more confident and in control. This is your team, your operations, your brand reputation, and your stakeholder trust on the line, and it’s natural to feel the pressure. I’ve worked alongside CPG founders through these challenges, coaching them on cash flow management strategies that turn sleepless nights into actionable plans, even when an equity round feels just out of reach.

I’ll walk you through the strategies I’ve used to help businesses manage cash flow and survive the gap to come out stronger on the other side.

1. Assess Your Financial Position

A complete and up-to-date view and checklist of your finances helps you make informed decisions quickly and prevents costly missteps.

From experience, I know that now is the time to evaluate every detail—cash inflows, cash outflows, upcoming obligations, pending receivables, and forecasted returns—so you can plot the next 4 to 10 weeks with precision.

Here are some cash runway tips to get you started:

• Measure your cash runway. Divide your cash reserves by your monthly burn rate (total monthly expenses). If you’re sitting on $120,000 and burn $40,000 a month, you’ve got 3 months of runway left. Shrinking margins? Adjust projections to see how much time you have if revenue dips.

• Break down upcoming obligations. List every payment you owe in the next 12 weeks—no matter how small—and split them into critical (e.g., paying for ingredients needed to fulfill an order) and secondary (e.g., office software subscriptions). You’ll prioritize accordingly.

• Track overdue invoices. Follow up on any outstanding receivables to accelerate cash inflow. Send gentle reminders or offer small incentives for early payments to close gaps in your cash flow.

• Use the right tools. If you’re using accounting software such as QuickBooks, Xero, FreshBooks, or Sage, run your cash flow report and set up weekly reviews to keep it updated. If you’re not using tools yet, even a spreadsheet will do—what matters is accuracy and consistency.

If you’re a beverage brand finalizing a big order for a national retailer, I suggest that you map out supplier payment dates, production costs, and when cash from the sale will hit your account.

2. Identify Fixed Costs and Variable Costs and Optimize Negotiations

When your cash runway is shrinking, every dollar you spend needs justification. You can’t eliminate all costs, but you can extend your runway by identifying what’s essential, delaying what’s not, and negotiating better terms.

I’ve always told clients to start by taking a microscope to their expenses: what keeps the lights on, and what can you defer or adjust without hurting operations? Let’s look at how to categorize and manage expenses effectively:

• Separate fixed from variable costs. Fixed costs—like rent or equipment leases—are harder to reduce but not untouchable. Variable costs, such as raw materials, packaging, marketing spend, outsourced labor, or contract manufacturing services, have more flexibility.

• Identify critical variable costs. If skipping a payment will halt production, delay a critical shipment, damage supplier relationships, or derail marketing efforts, keep it at the top of your list. For example, if you’re producing a seasonal product, paying for key ingredients today could secure your revenue tomorrow.

• Prioritize essential services. Evaluate contracts for critical services, such as utilities, payroll processing, or insurance premiums, and make smaller, incremental payments if possible to free up short-term cash.

• Assess subscriptions and contracts. Review software subscriptions, memberships, and consulting retainers, and cancel, pause, or downgrade non-essential commitments until your cash flow improves.

• Open negotiations with vendors. Transparency is your best tool. If investor funds are weeks away, call suppliers and ask, “Can we extend terms for this month and settle the balance after our equity round closes?” Most vendors prefer flexibility over losing a reliable client.

If you’re a snack food producer preparing for a major retailer’s fall campaign, I’d recommend prioritizing payments for your top SKUs' ingredients while delaying packaging orders for secondary items.

3. Strategically Reduce Costs

I’ve found that cutting costs during a cash crisis is usually a smart choice. Start with the largest expenses, but don’t overlook smaller ones because savings add up. Every decision you make here helps stretch your runway and buys you valuable time.

Focus on these financial crisis management strategies:

• Trim discretionary spending. Pause anything non-essential for the next 4-10 weeks. If you’re running multiple ad campaigns, prioritize the ones delivering immediate revenue, driving short-term conversions, generating rapid traction, and boosting seasonal sales, and pause brand-building efforts that can wait.

• Eliminate operational inefficiencies. Look for tools, services, or processes that overlap or aren’t being used efficiently. For example, if you’re paying for two software platforms to manage inventory and orders, consolidate to one that can handle both. (No changes to this list.)

• Negotiate short-term savings. Talk to service providers like logistics companies, landlords, or equipment lessors. If you’re paying $6,000 a month for third-party warehousing, ask about reducing square footage or consolidating slower-moving stock to lower costs.

For instance, if you’re a coffee brand paying for full-service fulfillment but only 70% of your SKUs are selling fast, switch to partial fulfillment focused on your bestsellers. You’ll reduce warehousing fees while making sure you meet customer demand for your core products.

4. Leverage Creative Financing Solutions

Creative financing options can provide the short-term cash injection you need to stay afloat, but the key is using them responsibly. If you’re weeks away from closing an equity round, the progress you’ve made with investors can be a powerful tool to unlock financing or extend vendor flexibility.

Below are actionable solutions to consider:

• Invoice factoring. If outstanding invoices are holding up your cash, factoring unlocks funds quickly. For instance, if a retailer owes you $50,000 in 30 days, factoring can give you 80%-90% of that amount upfront for a small fee. It’s not free money, but it bridges the gap.

• Short-term lines of credit. Banks and lenders favor businesses with signed term sheets. Use this to negotiate a line of credit that closes alongside your equity round, reassuring lenders that repayment is imminent.

• Revenue-based financing. If you have steady sales, explore revenue-based financing, where repayments align with your income. Enhanced flexibility should allow you to manage repayments during slower months without added pressure.

• Parallel process financing. Work on closing your equity raise and short-term financing simultaneously. For example, if you’re a juice brand nearing a funding close, align a line of credit to finalize alongside investor funds. Lenders will appreciate the security, and you’ll gain immediate liquidity.

Let’s say you’re a beauty brand running low on cash but with investor interest locked in. Telling vendors, “We have signed agreements, and funds are closing in eight weeks,” means you can typically extend payment terms without straining relationships.

Let BBG Help You With Managing Cash Flow

When cash is tight, managing cash flow properly can be the difference between surviving the gap and stalling out entirely. 

At BBG, we help CPG brands like yours overcome financial challenges and accounting setbacks with confidence. Let’s roll up our sleeves and find solutions together so you can take back control of your cash flow.

Take a look at our Ultimate Guide to Winery Accounting and Why Your Accountant Needs to Be a CPG Expert. 

Contact Balanced Business Group for hands-on support and strategies to steady your business today.

Author: Eileen Vasko

Eileen Vasko is an accomplished Accounting professional with over 10 years of experience in financial management, cost accounting, and compliance. As a former Controller at Iron Horse Vineyards, she excelled at managing complex financial operations, including inventory cost accounting. As the Accountant Manager Team Lead at BBG, Eileen specializes in building highly efficient accounting processes including accounts payable/receivable, payroll, and tax reporting. Eileen is highly skilled in using advanced accounting platforms and tools to drive efficient processes.