A step-by-step response plan for when cash falls critically low — covering immediate cost actions, revenue acceleration, creditor management and emergency financing options.
1. Immediate Assessment (First 48 Hours)
- Prepare a 13-week cash flow forecast immediately Use actual bank balances as the starting point; update daily until the crisis is resolved.
- Identify the exact date cash reaches minimum operating threshold Define the threshold; count the days; this is the clock you are working against.
- List every committed outgoing payment for the next 90 days Date, amount, payee, and contractual obligation status for each item.
- Identify which cost commitments are contractually obligated vs discretionary Separate hard obligations from soft; discretionary spend is the first line of control.
- Convene emergency finance meeting: CEO, CFO, and chairman within 24 hours Align on the severity, the plan, and the decision-making authority for the crisis period.
- Engage legal counsel immediately if insolvency triggers may be approaching Directors’ duties change when insolvency is a possibility; get advice before acting.
2. Cost Reduction Actions
- Freeze all non-essential spending New vendor commitments require CFO sign-off with immediate effect; communicate to all budget holders.
- Identify top 5 discretionary cost lines — pause or eliminate immediately Target the largest items first; smaller cuts have disproportionate management cost.
- Headcount review: critical revenue vs support roles Identify roles critical to revenue generation vs administrative support; inform restructuring decisions.
- Defer all capital expenditure not contractually committed Any capex not yet under contract is deferred until the cash position is stable.
- Renegotiate supplier payment terms Request 30–60 day extensions from the top 10 suppliers by spend; be direct and early.
- Review all subscriptions and SaaS tools Cancel anything not critical within next 30 days; consolidate overlapping tools immediately.
- Salary deferrals: discuss with legal and HR Board approval required; document carefully; obtain written employee consent where required.
3. Revenue Acceleration
- Call top 5 customers: request upfront payment or accelerated invoicing Personal approach at CEO / CFO level; offer a small discount for immediate payment if necessary.
- Review pipeline: deals that can close in next 30 days with incentive Identify late-stage deals; consider pricing or terms concession to accelerate signature.
- Unlock any deferred or contracted revenue that can be invoiced immediately Review all contracts for billing milestones that can be triggered now.
- Accounts receivable: chase all overdue invoices at CFO / CEO level Personal contact from senior leadership signals urgency and typically accelerates payment.
- Consider revenue-based financing against receivables Applicable if receivable quality is sufficient; engage invoice finance provider or factor.
4. Emergency Financing Options
- Contact existing investors: bridge financing options Shareholder loan, bridge note, or emergency equity round; existing investors are the fastest path.
- Venture debt lender: review drawdown conditions and headroom If a venture debt facility is in place, review conditions for further drawdown and covenant position.
- Government-backed schemes: Innovate UK and British Business Bank Check eligibility for relevant facilities; turnaround times vary but worth pursuing in parallel.
- Asset-backed lending: IP, receivables, or equipment Identify any assets that could support a secured lending facility; engage specialist lenders.
- Strategic partnership or commercial deal with advance payment Consider whether any partner, customer, or acquirer would pay an advance for commercial rights.
5. Stakeholder Communication
- Board notified formally Written communication within 24 hours of crisis identification; include the 13-week forecast.
- Investor update: factual, calm, solution-focused State clearly what the situation is, what you are doing about it, and what you need from investors.
- Key employees: honest communication about the plan Retain critical people through transparency; uncertainty is more damaging than the truth.
- Creditors: proactive contact Better to manage the relationship than to ignore it; early dialogue preserves goodwill and options.
- Legal: ensure directors’ duties are being met Consider formal insolvency advice if the company may be unable to pay its debts as they fall due.
