Understanding Cash Behaviour — Part 3: From Cash Patterns to Better Business Decisions

Cash behaviour only becomes powerful when it changes decisions. I remember a time when my consolidated 13-week cash liquidity forecast showed that the business could fall to around £1m cash within three months. Another finance forecast showed around £20m. That was not a small difference. It was a warning signal. For a business with annual turnover above half a billion, £1m cash was dangerously low. My forecast challenged the more traditional view and, naturally, made some people uncomfortable. But the Group CFO took it seriously. The leadership team acted quickly. Cash collection was tightened. Cash payments were managed more rigorously. Decisions became sharper because the business could see the liquidity risk before it became a crisis. The issue was not intelligence or effort. The issue was methodology. The traditional forecast relied heavily on debtor balances and debtor days. In theory, that sounds logical: if debtors are at a certain level, and debtor days are known, then future cash collection can be estimated. But cash does not always follow an accounting formula. Cash collection is the result of everything happening inside the business: sales quality, operational delivery, billing discipline, customer behaviour, credit control effectiveness, cash allocation, payment timing, leadership focus, and market conditions. This is why cash behaviour matters. Daily cash liquidity reporting captures the actual movements of cash: what came in, what went out, what changed, and what pattern is emerging. The 13-week forecast then turns those patterns into forward-looking intelligence. I saw the same principle in another scenario. A business reported strong revenue, including a significant amount of unbilled revenue. EBITDA and net profit looked healthy. The financial reports presented a positive picture. But the business was bleeding cash. It was struggling to pay suppliers, tax, and employees. The profit story and the cash reality were moving in opposite directions. This is where daily cash liquidity reporting becomes critical. It gives senior leaders a direct view of actual cash inflows, outflows, balances, pressure points, and trends. It shows whether the business is genuinely cash healthy or merely profitable on paper. Financial statements are essential, but they are not designed to manage cash day by day. A well-designed daily cash liquidity report is. Without daily cash visibility, businesses can fly blindly behind attractive accounting results. With cash behaviour properly observed and explained, leaders can act earlier, forecast better, and make decisions with greater confidence. Cash behaviour turns cash reporting from a historical record into a leadership instrument. That is the essence of SLOS: turning cash movement into cash intelligence. Mala Sun — Founder of Stoneorose Treasury