Making Repayment Work With Your Cash Flow
Practical ways to fit financing payments into the rhythm of your business and handle a slow month without panic.
Getting funded feels like the finish line. In reality it is the starting line: now the payments arrive on schedule, whether it was a great week or a rainy one.
Owners who handle repayment well are not lucky. They plan for the payment the same way they plan for rent and payroll, and they act early when something changes.
Match payments to your cash cycle
Think about when money comes in. A restaurant sees cash daily. A contractor may wait 30 to 60 days for an invoice. A seasonal shop earns most of its year in a few months. A payment schedule that fights your cash cycle creates stress even when the business is healthy.
| Cash pattern | Schedules that often fit | Watch for |
|---|---|---|
| Daily card sales | Percentage of sales, daily or weekly | Slow weekdays eating into float |
| Monthly invoices | Monthly payments | Customers paying late |
| Strong seasons | Payments that flex, or a reserve for the off-season | Fixed payments in the slow months |
A simple repayment routine
- 1
Put payments on the calendar
Add every debit to your cash forecast. See Seasonal Cash Flow.
- 2
Set money aside
Many owners move a fixed share of each deposit into a separate account that covers upcoming payments.
- 3
Keep a buffer
Aim to hold at least a few payments' worth of cash so one slow week does not cause a missed payment.
- 4
Review monthly
Compare actual sales against what you expected when you signed, and adjust spending early.
If sales dip, talk early
Many lenders and funders have options for temporary hardship, such as adjusted payments, a short deferral, or a reconciliation that matches remittances to actual sales. These options are usually easier to arrange before a payment bounces. Call, explain what happened, and share recent numbers.
Do not cover one payment with new financing
Taking a new advance to make payments on an existing one (stacking) tends to make the squeeze worse. If payments no longer fit, start with your current provider and your numbers.
Refinancing and consolidation
Replacing one or more debts with a single new one can lower payments or cost, especially if your credit and history have improved. Before you do, compare the total remaining cost of what you have with the total cost of the new deal, including fees and any amount still owed under factor-rate agreements, which may not shrink with early payoff. A lower payment over a much longer time can still cost more overall.
Owner story
When two large clients paused service, Grace saw her weekly deposits drop by a third. Before her next payment, she called her funder, sent recent bank statements, and asked about adjusting her weekly amount. The payment was reduced for two months while she replaced the lost clients, and she avoided overdrafts entirely.
Illustrative composite, not a real customer.
Quick check
Your annual cash earnings are $120,000 and total annual debt payments are $100,000. A new offer would add $30,000 a year in payments. What happens to your DSCR?
Words to know
- Debt service
- The total payments required on your debts over a period.
- DSCR
- Cash earnings divided by debt payments; above 1.0 means earnings cover payments.
- Refinancing
- Replacing existing debt with new financing, ideally on better terms.
- Deferral
- An agreement to pause or postpone payments for a period.
Finished reading?
Track your progress through Stage 3: Fund.
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