You should have a cash flow forecast so you know about problems well before they occur. For a rental property investor a yearly forecast may be appropriate. You would need to forecast for expected rental income, periods of no income, routine maintenance, and unexpected costs. For a business, a rolling 12 week (at least) cash flow forecast is advisable.
If your forecast shows a cash shortfall what should you do?
- Talk to your bank about additional funding to cover the gap in cash.
- Discuss with your suppliers delaying payment for a period of time.
- Reduce your inventory, and increase sales, by launching a promotion.
- Concentrate on collecting money from your debtors.
By dealing with future cash flow issues well in advance you will be able to negotiate with third parties, and make sensible plans, on a professional and businesslike basis. The bank is unlikely to be happy if the first thing they know about your problem is that you have exceeded your limits.
If you know about an issue before it occurs you have time to do something about it.