Cash Flow Checkup: Are You Positioned for 2027?

The typical U.S. small business holds about 27 days of cash if inflows stopped tomorrow. The bottom quarter of firms have closer to 13 days. That is not a crisis forecast. It is the normal operating condition for a closely held company that has a bookkeeper, a busy owner, and no one whose job is to look 90 days ahead.

A cash flow checkup is not a new set of books. It is a short, honest look at whether the business can make payroll, service debt, pay you, and still have room for what 2027 actually requires.

Costs are still the pressure point. In the Federal Reserve’s latest small-business credit survey, rising costs of goods, services, or wages were the most common financial challenge. A large share of firms that borrowed in the prior year did it to cover operating expenses, not to expand.

Receivables make the same problem worse. Recent owner surveys show a majority of small businesses deal with late customer payments. Nearly three in ten owners have delayed their own pay because invoices sat unpaid. About one in six have missed or nearly missed payroll for the same reason.

Credit is available, but it is not cheap money. Bank standards for small-business loans have been roughly steady, and short-term borrowing rates remain well above the pre-2022 period. A line of credit that felt like a safety net at 4% feels different when the note is priced off today’s prime.

Minnesota owners have another issue that does not show up cleanly on a premium invoice. State Paid Leave started in 2026 and continues in 2027. An employee can take up to 12 weeks of medical leave and up to 12 weeks of family leave in a benefit year, with a combined cap of 20 weeks. The state pays the wage replacement. The employer still has to cover the work. In a 12-person business that usually means overtime, a temp, or the owner filling in, while you keep the job (or an equivalent one) open and keep benefits going. You cannot plan that absence the way you plan a vacation. It is hard to put a neat dollar figure on it, and that is the point. For a small Minnesota company, lost capacity plus replacement cost plus the job guarantee is a real cash and operations problem, not just another line on the payroll tax report.

None of that means 2027 will be a bad year. It means the companies that enter it with a plan for cash will have options. The ones that only watch the checking-account balance will keep making the same three tradeoffs: delay the owner draw, stretch vendors, or put personal money back in.

You do not need a 40-tab model. You need answers an owner can use.

1. How many weeks of operating cash do you actually have?
Count cash that is unrestricted. That means not the line of credit, not a tax refund you hope arrives, and not inventory you would have to discount to sell. Divide that by a normal week of payroll, rent, inventory purchases, and debt service. If the answer is under four weeks, you are running on timing. If it is under two, one late customer or one tax estimate can dictate the month.

2. Can payroll clear without a hero move?
Payroll is the cash event that cannot slip. Look at the next four pay dates against expected collections, not against last month’s revenue. If the only way those dates work is a draw on the line, an owner loan, or holding vendor checks, the issue is not a tight week. It is a structural gap between when you pay people and when customers pay you.

3. Is the debt working for the business or is the business working for the debt?
List every facility: term loan, equipment note, owner note, credit card, and the line. For each one, write the payment, the rate, and whether it is tied to prime. Then ask the only question that matters: is this balance funding a productive asset, or is it filling a hole that will still be there next quarter? Paying debt down is a good goal. Paying the wrong debt first or sweeping every extra dollar to principal while the line is maxed and payroll is tight, is how healthy companies feel broke.

4. What does the company need from you in 2027, and what do you need from it?
Owner draws, distributions, and “I’ll just wait on my paycheck” are cash decisions, not lifestyle footnotes. If the plan for next year includes a new hire, a down payment on equipment, a building repair, or buying out a partner, those dollars have to come from somewhere besides hope. Write the number. Put it on the same page as debt service and payroll. If the page does not add up, the plan is a wish.

5. If the next generation or a buyer showed up in 18 months, would the cash story help or hurt?
You do not have to be selling. Transfer, gift, management buyout, or a bank refinance all start with the same questions. How lumpy is collections? How dependent is the company on the owner’s personal guarantee and personal cash? How much working capital does this business actually need to run without you writing checks from home?

Buyers do not pay for last year’s profit if they cannot see how cash is produced. They pay for a business that can fund its own payroll, inventory, and debt without the seller’s checking account. Messy receivables, a maxed line, and owner cash plugged into the gap all show up in working capital and in the multiple. Clean, predictable cash flow is one of the few things that both keeps you out of trouble next year and supports a higher value when someone else is writing the check.

Good is not a perfect forecast. Good is being able to answer those five questions without opening eight spreadsheets and calling the bookkeeper at 9 p.m.

A positioned company usually has:

• A 13-week cash view that is updated, not created once and abandoned
• A working-capital target (receivables, inventory, and payables) that matches how the business actually operates
• A line of credit that is sized and used as a shock absorber, not as permanent capital
• A rule for owner distributions so the company and the household are not guessing every month
• One person, inside or outside, who owns the forward look, not just the historical books

Your bookkeeper can tell you what happened. Someone in a controller or fractional-CFO seat should be able to tell you what happens if collections slip two weeks, if you add a person in March, or if you take a principal payment holiday and regret it in June.

Before you rebuild anything, pull four items:

1. Last 12 months of monthly profit and loss and balance sheet
2. Current aged receivables and payables
3. Debt schedule with rates, maturities, and guarantees
4. Next 90 days of known cash events: payroll dates, tax estimates, insurance, inventory buys, owner draws

If those four packets are messy, that is the first finding. You cannot position for 2027 on reports nobody trusts.

Froehling Anderson’s Finance and Accounting Solutions team works with closely held companies that have internal bookkeeping and need a higher-level view: cash, working capital, debt capacity, and the decisions that sit on top of the close.

If you want a straightforward read on whether the business is positioned for 2027, reach out to us on our website. This is not a sales pitch and not a 40-page deck. We will tell you what the numbers say and what is worth fixing first.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or audit advice. Please consult with your plan advisor or CPA for guidance tailored to your situation.