Thursday, 3:45 PM - Lumberyard Parking Lot
Marcus Rivera stared at his phone.
DECLINED.
The credit card terminal flashed red. Again.
$8,200 for lumber. The job started Monday. His crew was already scheduled. The homeowner had paid the deposit three months ago—$6,700, sitting in the business account.
Except it wasn't sitting in the account anymore. Marcus had spent it. On what? He couldn't even remember. Materials for other jobs. Payroll. Supplier payments. The usual.
The lumberyard manager tapped on his truck window. "You want me to try another card?"
Marcus had already tried three cards. All maxed out.
His phone buzzed. Text from Elena, his wife: "Payroll is tomorrow. Did you transfer money to the payroll account?"
He hadn't. Because there wasn't any money to transfer.
Marcus rolled up his window. Alone in his truck, he pulled up his bank account.
Business Checking: $3,200 Payroll Due Tomorrow: $22,000
He wasn't broke. Not really. He had $180,000 in receivables. Three big projects finishing up. Customers owed him money. Good money. He was booked solid for the next six months.
But he couldn't buy lumber. Couldn't make payroll.
This wasn't supposed to happen. His accountant sent him the P&L every month. Profitable. Consistently profitable. Best year in company history.
So why was he sitting in a lumberyard parking lot, too embarrassed to go back inside?
Meet Marcus Rivera. 42, owner of Rivera Construction & Remodeling. Eight years in business. Fourteen employees. $2.8 million in annual revenue.
By every visible measure, Marcus was successful. But that Thursday afternoon, he couldn't make payroll.
What he didn't know—what he was about to discover over a painful weekend—was that he was making five specific cash flow mistakes. Mistakes that were bleeding his business dry.
This is the story of how Marcus discovered those five mistakes, fixed them systematically over twelve weeks, and went from $3,200 in the bank to $185,000 in reserves.
The Five Mistakes Marcus Was Making (And He Had No Idea)
Mistake #1: Not Requiring Meaningful Deposits Up Front
What Marcus was doing:
- Taking 10% deposits on projects ($6,700 on a $67,000 kitchen remodel)
- Funding the entire rest of the project out of his own pocket
- Waiting 60-90 days for final payment
What this meant:
- Marcus had $240,000 of his own cash tied up in eight active projects.
- He was essentially giving interest-free loans to clients who could afford $200,000 renovations.
Mistake #2: Terrible Payment Terms (Net-60 to Net-90)
What Marcus was doing:
- Offering "flexible payment terms" (Net-60).
- One commercial client owed $85,000 and was 127 days overdue.
- Average days sales outstanding (DSO): 87 days.
What this meant:
- He was doing the work today and getting paid 3 months later.
- His business checking account showed $3,200, but customers owed him $180,000.
Mistake #3: Paying Suppliers Too Fast
What Marcus was doing:
- Most suppliers offered Net-30 terms.
- Elena paid every bill within 7-10 days of receiving it.
- Average days payable outstanding (DPO): 9 days.
What this meant:
- Marcus was giving away 20+ days of cash flow on every transaction.
- The gap between paying suppliers and collecting from customers: 78 days.
- That gap had to be funded by personal savings and maxed-out credit cards.
Mistake #4: No Cash Reserve / No Buffer
What Marcus was doing:
- Operating at zero margin—every dollar in went right back out.
- No emergency fund.
- When there was a shortfall, he pulled from personal savings ($47,000 so far this year).
Mistake #5: Not Tracking Cash Flow (Only Watching P&L)
What Marcus was doing:
- Reviewed the monthly P&L.
- Saw profit, assumed he had cash.
- Never forecasted upcoming cash needs.
The Reality: P&L profit uses accrual accounting. It records revenue when you invoice, not when you collect. Marcus was profitable on paper, but broke in cash.
The Weekend Audit: Facing the Truth
Marcus and Elena spent the weekend analyzing their books. The brutal truth:
- $362,000 of their money tied up in active projects.
- $280,000 in receivables (average wait: 87 days).
- Paying suppliers 22 days early (giving away $62,000 in working capital).
- Zero cash reserves.
Elena closed her laptop. "We're not running a business. We're running a charity."
The 12-Week Action Plan
They met with a mentor who gave them a plan.
Week 1-4: EMERGENCY PHASE (Stop the Bleeding)
1. Aggressive Collections Marcus called the client who owed $85,000 (127 days overdue). "I need this resolved this week. If I don't receive payment by Friday, I'm filing a lien Monday." Result: Check collected Thursday.
Total collected Week 1: $163,500. Cash account went from $3,200 to $168,700.
2. New Deposit Policy
- Old: 10% deposit.
- New: 50% deposit upfront on all projects.
- Result: Collected $136,500 in deposits on three new projects (freed up $109,000 he didn't have to self-fund).
Week 5-8: STABILIZATION PHASE (Build the Buffer)
3. Strategic Payment Timing
- Negotiated Net-45 terms with top 3 suppliers.
- Stopped paying invoices on Day 7. Started paying on Day 28.
- Freed up ~$65,000 in working capital.
4. Build Reserves
- Opened a separate savings account: "DO NOT TOUCH."
- Automatically transferred 20% of every payment received.
- Balance at Week 8: $48,400.
Week 9-12: SYSTEMS PHASE (Make It Stick)
5. Weekly Cash Flow Review
- Every Monday morning, 7:00 AM.
- 13-Week Forecast: Look 10 weeks ahead.
- Flag problems early (before the lumberyard parking lot crisis).
The Transformation: 12 Weeks Later
Thursday, Week 12.
Marcus pulled into the same lumberyard. Needed $11,200 in materials. He swiped his company card. APPROVED.
The Numbers:
| Metric | Week 1 | Week 12 |
|---|---|---|
| Cash on Hand | $3,200 | $185,200 |
| Personal Savings Used | $47,000 | $0 (repaid) |
| Average DSO | 87 days | 38 days |
| Cash Reserves | $0 | $147,000 |
He wasn't running a charity anymore. He was running a business.
Your Action Plan
If Marcus's story sounds familiar, start here:
- Audit: Calculate how much of your money is tied up in client projects.
- Collect: Call everyone over 45 days past due. Today.
- Terms: Require 50% deposits. Don't fund your customers' projects.
- Reserves: Open a separate account. Transfer 5-10% of every check you receive.
Profit measures performance. Cash measures survival.
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BizViz connects to your QuickBooks/Xero and automates the 13-week forecast, collections alerts, and reserve tracking Marcus used.