Payment scheduling: how to prioritize without running out of cash
Payment scheduling: how to prioritize without running out of cash
On the 28th payroll comes due and there is nothing to pay it with. Three weeks earlier there was plenty of money, and it was spent on whatever showed up first: invoices that could have waited, an advance nobody asked for, an expense that was never in the budget. Nobody made one absurd decision; twenty small ones were made without looking at the whole month.
Payment scheduling means exactly that: looking at the entire month before releasing the first check. Here is how to prioritize, how to build the weekly calendar, which dates never move, and how to get out of a week of cash tension without taking an emergency loan. All of it with a four-week example, in Colombian pesos, that balances to the peso.
Why the payment calendar is a management tool
Paying is not a treasury chore: it is the decision of who gets a scarce resource first. When that decision is not written down, it is made by whoever calls loudest or has the owner's direct line. So what sounds urgent gets paid first, not what is serious.
A calendar does three things no accounting report does. It puts a date on every commitment and exposes the shortfall weeks in advance, when there is still room to negotiate. It takes the power to promise payments away from operations: the promise comes from the calendar, not from enthusiasm. And it turns supplier negotiation into a verifiable argument: "you get paid on the 15th, not before" sounds different with a board behind it.
The practical difference is measured in days, and days cost money. A shortfall spotted on Monday is solved with a terms agreement. The same shortfall spotted on Friday is solved with a 30-day treasury loan, the most expensive way to buy time.
What gets paid first: obligations that cannot wait
Priority is not set by the invoice amount or by arrival order. It is set by two variables: what it costs to default and how fast the consequence lands. A five-million invoice from a replaceable supplier is less urgent than a two-million contribution due tomorrow.
| Level | Obligations | What happens if you default |
|---|---|---|
| 1 | Payroll and social security contributions: wages, health, pension, workplace risk and parafiscal contributions | Walkouts or resignations, labor lawsuits, interest and penalties on late contributions; the team finds out before the bank does |
| 2 | Taxes and withheld amounts: withholding at source, Colombian VAT (IVA), municipal business tax, income tax | Late-payment interest and penalties; on withheld amounts that were never remitted, liability falls on the legal representative |
| 3 | Debt service: loan installment, leasing, corporate card | Negative report at credit bureaus, every future loan gets more expensive, acceleration of the obligation |
| 4 | Critical operations: rent, utilities, single-source supplier | Service cutoff, production stoppage, default toward customers |
| 5 | Suppliers with substitutes: inputs with two or three bidders, non-urgent maintenance | Loss of bargaining power and extra cost, but postponement is possible |
| 6 | Discretionary spending: advertising, travel, fit-outs, non-critical tools | Postponed with no operational impact; it is the first source of cash when things tighten |
Levels 1 and 2 are not just the most important: they carry a legal date. If the contribution is due on Thursday, paying it on Friday is not an option. Levels 4 and 5 do have room, and that is where you negotiate before the problem becomes a collection call.
How to build the weekly calendar
The calendar is built once a week and fits on one sheet. Five columns: payment date, counterparty, concept, amount and status. Status has two useful values, confirmed or probable. Probable items sit beside the calendar so they are not forgotten, but they fund nothing.
Three rules separate a decorative calendar from one that works. Inflows are only confirmed when the customer gave a date; a buyer's verbal promise is not cash. The balance is rolled day by day: a payment on Tuesday and a collection on Thursday are a two-day shortfall even if the week closes fine. And what you watch is the period's minimum balance, not the closing one.
A mid-sized case shows it. The company starts the month with 25,000,000 in cash. It collects 20,000,000 in week 1, 15,000,000 in week 2, 15,000,000 in week 3 and 10,000,000 in week 4: 60,000,000 for the month. Payments total 80,000,000, so the month consumes 20,000,000 of cash.
| Week | Collections | Payments | Closing balance |
|---|---|---|---|
| Week 1 | 20,000,000 | 24,000,000 | 21,000,000 |
| Week 2 | 15,000,000 | 33,000,000 | 3,000,000 |
| Week 3 | 15,000,000 | 12,000,000 | 6,000,000 |
| Week 4 | 10,000,000 | 11,000,000 | 5,000,000 |
The closing balance of 5,000,000 looks calm. The number that matters is 3,000,000 at the end of week 2: that is where the margin for error runs out.
Suppliers: negotiate terms, don't default
A supplier's payment term is a commercial condition, not a favor, and it is negotiated before you owe, not after. Asking for an extension on an invoice that is already due means asking from the weakest position: the supplier knows you did not pay, and the natural reaction is to cut the credit line or raise the next quote.
Negotiating early means offering something in exchange: volume, electronic payment that saves them collection work, a fixed and predictable date, or a partial advance. Many suppliers prefer a customer who pays on the 20th every month to one who pays on the 15th sometimes and the 40th other times. Predictability is worth money and can be charged in days of terms. Watch the early-payment discount too: 2% for paying twenty days early works out to a very high annual rate and only pays off if cash covers it without leaving payroll uncovered.
When the delay has already happened, the sequence is short. Call before they call. Explain the plan with concrete dates, not intentions. Honor the first installment even if it is small, because what gets rebuilt is credibility, not the debt. And put the agreement in writing so it does not depend on two people's memory.
Payroll, social security and taxes: dates that do not move
These three share something the rest do not: the date is set by an external calendar, not by the company. Social security contributions fall due according to the last digit of the contributor's tax ID (NIT); taxes have period and municipal deadlines; payroll has the date the company itself promised in the contract.
Because the date is fixed, the only management variable is provisioning: money is set aside when the obligation is incurred, not when it falls due. A company that withholds taxes does not hold that money as its own; it administers it for third parties. Treating it as available cash is the mistake that turns a 6,000,000 obligation into an 8,000,000 problem with interest and penalties.
The simplest practice that works: a separate account for taxes and contributions, funded automatically the day the obligation is incurred, plus a weekly payroll provision. What remains in the operating account is what can truly be spent. If that balance cannot cover the supplier, the conversation is about the supplier, not about payroll.
Review the current year's tax calendar every year and confirm with your accountant which dates apply, because they shift with the last digit of the NIT, the tax regime and the municipality. A date recalled from memory is a date you will miss.
Debt service and utilities
The loan installment is not renegotiated monthly, but it can be restructured before maturity. When cash flow does not cooperate, the useful conversation with the bank happens thirty days before the payment, with financial statements and a plan, not on the due date with an apologetic call. A negotiated grace period costs less than a negative credit report, which makes every later loan more expensive for years.
Utilities and rent have a billing cut-off and a payment deadline that rarely coincide. Automatic debit prevents forgetting, but it requires funding the account the day before; a bounced debit adds a fee, late interest and sometimes a service cutoff.
Also review the real cost of debt every quarter: fees, bundled insurance, account charges. The effective rate on a revolving line usually exceeds the quoted one, because the bank charges for the available limit and not only for what is drawn. That limit is a backstop, not permanent working capital.
How to use available cash without losing your buffer
Available cash is not the bank statement balance. It is that balance minus checks issued and not yet cleared, minus commitments for the next ten days, minus the tax provision. Decisions about the buffer are made on that number, not on the bank's.
A workable reference for small and mid-sized companies: cover two to four weeks of non-negotiable payments. The math is simple. If payroll, rent, debt service and taxes total 35,000,000 for the month, two weeks equal half, 17,500,000. That is the floor you do not touch, not for a discount and not to look good with a supplier.
Below that floor the bad decisions start: the contribution gets postponed, the credit line gets used, an advance is requested at a discount. Each one works once and makes the next one more expensive. The rule that breaks the spiral: the buffer is not negotiated in the weekly meeting, it is set once and treated as one more obligation on the calendar.
Four weeks with cash tension: the full example
With the data from the case above, the line-item detail shows where the problem sits and what can be moved.
| Item | Week 1 | Week 2 | Week 3 | Week 4 | Month total |
|---|---|---|---|---|---|
| Opening balance | 25,000,000 | 21,000,000 | 3,000,000 | 6,000,000 | — |
| Collections | 20,000,000 | 15,000,000 | 15,000,000 | 10,000,000 | 60,000,000 |
| Suppliers | 20,000,000 | 15,000,000 | 5,000,000 | 5,000,000 | 45,000,000 |
| Payroll | — | 18,000,000 | — | — | 18,000,000 |
| Rent | 4,000,000 | — | — | — | 4,000,000 |
| Debt service | — | — | 7,000,000 | — | 7,000,000 |
| Taxes | — | — | — | 6,000,000 | 6,000,000 |
| Total payments | 24,000,000 | 33,000,000 | 12,000,000 | 11,000,000 | 80,000,000 |
| Closing balance | 21,000,000 | 3,000,000 | 6,000,000 | 5,000,000 | 5,000,000 |
The math, step by step. Week 1: 25,000,000 plus 20,000,000 collected minus 24,000,000 paid leaves 21,000,000. Week 2: 21,000,000 plus 15,000,000 minus 33,000,000 leaves 3,000,000. Week 3: 3,000,000 plus 15,000,000 minus 12,000,000 leaves 6,000,000. Week 4: 6,000,000 plus 10,000,000 minus 11,000,000 leaves 5,000,000.
There is the real problem. In week 2 payroll is paid and 3,000,000 is left. If the 15,000,000 collection slips three days, or a check does not clear, payroll is not funded with the company's own cash but with the bank's credit line. The company is not near bankruptcy; it is one surprise away.
There are two levers and neither is free. First: move 5,000,000 of supplier payments from week 2 to week 4. Week 2 rises to 8,000,000, week 3 stays at 6,000,000 and week 4 drops to zero. It buys air, but the month ends with no cushion and any slipped collection turns the close red. It buys two weeks, it does not fix the month.
Second: negotiate 8,000,000 with suppliers into the following month. Week 2 rises to 11,000,000 and the problem leaves this month, but the commitment moves rather than disappears: next month opens owing 8,000,000 more. It is the best exit if, and only if, next month's cash flow can carry it. Before signing, run that month's calendar with the extra debt included.
And there is the bad exit, the default one: covering the gap with a treasury loan. Eight million for thirty days at 24% annual interest costs 160,000. The math: 8,000,000 times 0.24 is 1,920,000 a year, divided by twelve, 160,000 for the month. The real cost is not that figure, it is the habit: repeated every month it is 1,920,000 a year and a credit line that is gone the day an opportunity shows up.
Signs that cash is tightening
Cash tension rarely announces itself with a red number, but with symptoms that become normal until they stop looking like symptoms. These deserve to be treated as alarms.
- You regularly pay inside the grace period, not as an exception.
- The revolving line is used every month and never returns to zero.
- You ask customers for advances at a discount, or sell receivables at a discount.
- Contributions and taxes are paid on the last possible date, month after month.
- You rotate from supplier to supplier because each one cuts the credit line after the first delay.
- Tomorrow's cash is already committed before the day starts.
- The statement balance does not match what the company thinks it has.
There is a one-minute way to measure it: days of cash, available cash divided by the average daily non-negotiable payment. In the example, 3,000,000 divided by 1,166,667 gives 2.6 days. Less than three days is a signal, even when the month closes positive.
Common mistakes
These five mistakes explain almost every cash crisis at companies that sell well and still cannot pay.
| Mistake | Symptom | Consequence | Correction |
|---|---|---|---|
| Paying in invoice arrival order | The loudest supplier gets paid first; the quiet ones accrue late charges | Postponable items get paid and the shortfall appears when there is no room left | Prioritize by cost and speed of the consequence |
| Leaving payroll for the end of the calendar | Payroll sits on the last line of the weekly schedule | It is the one obligation with no extension possible and it gets funded with expensive debt | Reserve payroll at the start of each week, before scheduling suppliers |
| Using the credit line as permanent cash | The drawn balance does not return to zero for months | You pay interest on money already spent and the line is missing when you truly need it | Treat the line as a backstop, with a cap and a repayment date |
| Promising payments that are not funded | Dates are given to suppliers before checking the calendar | You break your own promise and the next purchase costs more | Promise only with the calendar open and the collection confirmed |
| Not recording commitments already incurred | Purchase orders and services incurred without an invoice are missing from the calendar | The month overflows when the accumulated invoices arrive | One single commitments list with date, amount and approver |
A sixth mistake does not fit in the table: scheduling payments without tracking collections with the same rigor. Overdue receivables are a small company's first source of cash and almost always the least worked.
An honest closing before you decide
Payment scheduling does not fix a business that loses money. If the margin is negative, the calendar only makes the road to the same ending tidier; fix price, cost or mix first. It does not replace your accountant either: how an obligation is classified or the exact due date is confirmed with whoever keeps the books, not with a template.
And some cases do not fit this scheme as written: a company with a single customer paying at ninety days needs a monthly calendar and a larger buffer; a service business billing in advance follows a different cash logic; and an importer must add customs clearance time, which breaks any weekly schedule. Adjust the tool, do not abandon it.
What is universal is the underlying idea: scheduling payments protects two things at once, operations and reputation. Operations, because payroll and inputs arrive on time. Reputation, because a supplier who gets paid when promised keeps quoting the same price. Kardex Tauro helps keep receivables, payables and inventory in one place, which is the raw material of any payment calendar worth having.
