Running out of cash!

My (sole) client tells me that the next 30 to 45 days are going to be bad, he has run into a cash crunch and he probably cant make the payments.

And I am not in a position to do anything about it because more than a client we are partners (in business) and I’ve seen this coming since a mile back. I have two and half month of invoices pending. I have pending electricity and telephone bills for the past two months. The only utility bill I’ve paid last month was for the Internet, and that too was because my ISP is prompt in disconnecting when the due date is passed.

I was behind on the rent for 2 weeks and just paid it. I am behind by a month on payments for the ETF and EPF for the staff. I’ve bought tea and coffee for the office out of my personal credit card and I haven’t settled it!

Every entrepreneur runs into a cash flow issue at some point or the other. If you have met someone who has not, then (s)he’s one of the very few lucky ones. I’ve had it pretty good for the last two years and I am facing probably the worst cash crunch of my career and my company now. To make matters worse, I have staff, making me responsible for their salaries.

In Sri Lankan law you cannot lay-off people as easily and simply as in the US, which seems to be the first thing they do when run out of money. We have tougher labor laws and even if they were lenient, it’s the last thing I would ever consider doing. Laying staff off will bring about a dark cloud and a negative psyche to the company which will be very difficult to lift off. And I personally feel responsible for the careers of my team as I lured them away from jobs that they would have had still, had I not lured them.

On paper, my company is currently profitable. My profit and loss statement shows a healthy profit. But my bank account is near zero. At which ever point that I get paid my bank account will be pretty decently rich.

One thing I’ve managed to do all this time is to shield the cash flow issues from the staff. I do not want burden them with such worries and bring about doubt and worry to their minds. I don’t want anything affecting their work as we are running pretty tight deadlines on our projects. And I need them to concentrate on the deliveries 100%.

I am also trying to keep as much of the worry away from my family as well. I do not want to bring about undue worry on my wife. But it is becoming pretty hard as this is the start of a new school term and that means fees for school and extra curricular activities of my kids are now due. I’m putting them all off for next month but putting them off beyond that is not an option.

I am keeping my options open and doing my best to manage the situation for the next 30-45 days until the cashflow improves. By the looks of it I can probably survive another 30 days and beyond that it is not going to be an option. Unless some windfall comes my way!