Your Shop Can Make a Profit and Still Run Out of Cash

Imagine a small supplier completes a R12,000 order. Materials and delivery cost R8,000, leaving R4,000 before other expenses. The customer will pay next month. The supplier's rent is due tomorrow.

Timing changes the problem

The example is hypothetical and deliberately simplified. It shows why a margin on an order does not automatically become cash available to use. Costs can arrive before payment, and a growing business can repeat that gap on several orders at once.

Editorial image from Blogdel's business collection, used for illustration.

The SBA's finance guidance encourages maintaining records and understanding business finances. For this situation, put expected receipts and payments on a calendar rather than only in a total.

Look for the difficult week

List opening cash, likely incoming payments and unavoidable outgoing amounts for each week. Mark uncertain receipts separately. A customer's promise and cleared money should not occupy the same certainty level.

Then examine options before the shortage arrives: clearer payment terms, an appropriate deposit or a different purchasing schedule. Suitability depends on the business and agreements involved. The lesson is not to stop selling. It is to understand which sales require you to finance the waiting period, and whether your cash can survive that wait.

Editorial image from Blogdel's business collection, used for illustration.

Sources and further reading

• US Small Business Administration: Manage your business: finances and operations