The cash cycle

When to use it

Every day to record, every week to review.

The framework

Buying milk→Production→Waiting→Delivery→Waiting to be paid→Money back

Money goes out today and comes back days or weeks later. The longer this cycle, the more money you need to keep going.

Five rules:

1. Business money is separate from household money: a box, an account or a wallet just for the business.
2. Every amount in and out is written down the same day, in a notebook or in the daily notebook on your phone.
3. A reserve big enough to buy milk for as long as you usually wait to get paid.
4. With every shop: written payment terms, and a ceiling on what they can owe you (for example, the value of two deliveries). Once they reach it, no new delivery until they pay.
5. Plan for summer: less milk and higher prices, so save before it comes.

How to shorten the cycle: ask for payment on delivery, or payment in advance for weekly subscriptions, and give priority to customers who pay on time.