How to Manage Cash When Funds Are Short
Staring at your cash flow report and noticing a shrinking comfort zone can feel overwhelming, but you can take steps to feel more confident and in control, even when cash looks like it may fall short of where you want it. I’ve been in your position and come out the other side more than once, and at Cultivar, we work alongside CPG founders facing 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 we'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 of your finances helps you make informed decisions quickly and prevents costly missteps.
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. In my experience, CPG brands that do these calculations are more likely to manage financial turnarounds in time to make a difference in outcomes.
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). Prioritize accordingly. Most CPG brands I've worked with don't realize how much wiggle room they actually have, and I've found that it helps to have a third-party coach who can encourage these discussions.
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 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 nonessential commitments until your cash flow improves. I often recommend that CPG brands gather a few essential subject-matter experts in their organization and set up a matrix approach, evaluating each financial commitment based on what happens if you pause it, what value it brings, and how it impacts end-line revenues.
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.
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 nonessential 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.
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.
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 I often ask CPG brands 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 up front 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.
CPG brands that haven't explored this type of financing before may feel overwhelmed by options and how processes can fit into day-to-day operations. This is exactly the type of finance service support Cultivar can offer. Check out our case studies to find out how we've supported other CPG brands through a variety of challenges.
Let Cultivar 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 Cultivar, 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.
Contact Cultivar for hands-on support and strategies to steady your business today.
