What to do when cash is tight: the survival levers.

Almost every tech startup hits a cash squeeze at some point: a big customer pays late, a funding round slips, a key deal is lost. Those that survive usually see it early and act decisively. Those that struggle often wait, hoping a deal or an investor will arrive in time. The 13-week cash forecast is your early warning system; this guide is what you do when it flashes.

Step one: get the true picture in 48 hours

1. Update the 13-week forecast with actual bank balances and only receipts you are confident about.
2. List every liability with its due date: wages, PAYE, VAT, pension contributions, rent, loans, suppliers.
3. Find the cash low point and the week it happens.
4. Decide the gap you need to close, plus a buffer.

Step two: pull the levers, fastest first

Bring cash in sooner

• Chase every overdue invoice personally, by phone, today.
• Offer customers a modest discount for paying annually in advance or settling early.
• Invoice immediately on delivery and milestones, not at month end.
• Move customers to direct debit or card payments.
• Sell services you can deliver quickly, such as set-up, training or consultancy, to existing customers.

Push cash out later, with agreement

• Ask key suppliers for extended terms or a payment plan. Ask; do not simply pay late.
• Switch annual software renewals to monthly, or cancel tools nobody uses.
• If a tax bill is the problem, contact HMRC before the due date about a Time to Pay arrangement.

Cut costs that do not drive revenue

• Freeze hiring and non-essential spend.
• Pause paid marketing that does not have a proven payback.
• Reduce founding team salaries before anyone else’s, if you can.
• Consider whether any contractor or role can be paused. Changes to employees’ pay, hours or jobs have legal requirements; take advice and see Acas.

Raise short-term money, carefully

• A small bridge from existing investors, often as a convertible.
• Revenue-based finance if recurring revenue is predictable.
• Avoid personal guarantees and expensive short-term debt you cannot see a way to repay.

Step three: communicate

Tell your co-founder and board or investors immediately, with the forecast and your plan. Investors dislike surprises far more than bad news. Tell the team what they need to know, honestly, without creating panic. Keep key customers well served: they are your way out.

Directors’ duties

If the company may not be able to pay its debts as they fall due, directors’ duties shift towards protecting creditors, and continuing to trade without a realistic plan can create personal risk. If you are in that position, take advice early from your accountant and an insolvency practitioner. Early advice widens the options.

Worked example

Brightledger is a fictional Nottingham tech startup selling expense software to construction firms. A seed round it expected to close in March slipped to the summer, and its forecast showed cash running out in nine weeks. Within a week, the team chased £38,000 of overdue invoices, offered a five percent discount for annual prepayment (four customers accepted), cancelled £1,800 a month of unused software, paused paid ads, the two co-founders halved their salaries, and its two angels provided a small bridge on a convertible. The low point moved from minus £20,000 to plus £35,000. The round closed four months later, and the prepayment offer became a permanent option.

Common mistakes

• Waiting for the round or the big deal instead of acting now.
• Paying suppliers late without warning, which destroys goodwill.
• Using PAYE or VAT money to pay other bills.
• Cutting the people or tools that keep customers happy.
• Making small cuts repeatedly instead of one decisive set.

What to measure

• The cash low point and its date, every week.
• Cash collected versus overdue receivables.
• Monthly net burn before and after the actions.
• Customer churn during the squeeze.