Liquidity as a Habit for Seed to $50MM CPG Brands

Q1 and Q4 are my favorite quarters to be a consultant. There’s usually an ugly sweater party, an offsite with a resolution, and leaders look at a new year with nothing but potential.

I just wrapped my third offsite of the year with a client’s leadership team. Two were CFO scopes, one was a CMO scope – but while we didn’t open a single P&L, we did spend a good bit of time talking about cash.

It’s sometimes an unpleasant topic, taboo in certain company, but perfect when you have your leadership team assembled to discuss how much you have, and how it’s going to move. It gets stuck, it leaks. Sometimes it gets gummed up around a charismatic leader or critical investor’s pet projects (I once had an investor hold me financially “hostage” if I didn’t sponsor a race car). And a lot of startups make decisions on it based on vibes or self-preservation.

I even had a recent meeting with an investor who said: “let’s just 5x this thing with no additional cash. And then we’ll do a proper raise, while taking some money off the table”. Excuse me while I grab my bag of pixie dust.

What actually happens is the brand burns through its remaining runway trying to grow without fuel, hits a wall, and raises in a down-round.

CPG is capital intensive. Cash needs to be deployed. Putting it under lock and key doesn’t grow the company, nor does expecting something from nothing work. So what does?

Rethinking Liquidity

Liquidity isn't your bank balance. It's the compounding daily things you do (and don’t) that produces your bank balance. It must be designed intentionally like anything else. Here’s how.

AR & The Drumbeat Meeting

Mark Horstman refers to a project management as a drumbeat meeting. A term I later stole, and now I’m repurposing it for the AR meeting. Yes, a meeting, or at least a topic during the weekly drumbeat meeting…but it has to be on the agenda and it has to be weekly.

Most brands I work with treat A/R like an after-thought. Invoice goes out, payment comes in... eventually. Maybe 45 days. Maybe 70. Nobody's really sure because nobody's really tracking it at the customer level.

Here's what tracking it looks like: a weekly AR review with aging by customer. You need to know that Customer A is averaging 58 days while Customer B is at 34 and you need someone in the room who owns bringing A closer to B. This is a commercial conversation, because the person with the relationship is the person who can move the needle. Is this your sales lead? Probably not, but it’s someone. Not finance alone.

How do you accelerate A/R?

Be annoying. I worked with an Amazon agency who emailed us one week before, and again 3 days before, every invoice was due. They did it every month, it annoyed me every time, and they got paid early to leave me alone.

Consider early-pay discounts if you don't already have them baked in. They're almost always cheaper than your cost of capital or your risk of collection.

And don't wait for the 30/60/90 aging buckets to have a conversation. 30/60/90 is arbitrary because accountants have to bucket them in some way. But you can have these conversations whenever you want. Pick up a phone every now and again.

Track DSO monthly. And remember that AR is part of your borrowing base. Treat it like a strategic asset.

A/R that is chronically late is usually because no one is on top if it. And it’s generally an indicator that customer relationships are weak. Don’t have weak customer relationships.

A/P – Keep it Fresh

Terms are almost always negotiable. And every day that you can extend terms is another day you’re keeping cash in your business for growth.

And if you’re reading my blog, you are probably growing.

If you've doubled your volume in the last two years and you're still paying suppliers on the same terms you negotiated when you were a $12MM brand…you're leaving working capital on the table. Terms are leverage. They should be re-evaluated every time your purchasing power changes meaningfully. And with early stage brands, this is often.

Of course, don’t be a jerk, don’t make it about squeezing vendors. Start with matching your outflows to your inflows. If you're collecting from retailers in 45 days but paying your co-packer in 15, you're funding that 30-day gap with your own cash (or worse, your revolver). I get it because I’ve done it. My hands were tied. Yours might be too. But that gap has a cost, and most brands have never calculated it.

A/P Tips

Start by auditing anyone you're still on pre-pay with and switch them to credit terms as soon as you can. Then make term renegotiation a quarterly habit: is volume up? Did you just land a big retailer with a long-term commitment? Did your credit profile improve? Good. High five each other and then call your supplier.

Inventory – This is a Capital Allocation Decision

I hear inventory builds being mentioned as use of proceeds in so many pitches. It’s a legitimate need, but one that investors hate to fund.

Fixing your inventory issues gets the most nods and the least action. Every pallet sitting in your warehouse could be working dollars. And yet I consistently see brands over-ordering to hit MOQs without modeling whether the volume savings actually offset the holding cost and the opportunity cost of using that money for growth.

The math isn’t hard here, but it has to be a habit. Your sales team tracks velocities consistently, but that information is rarely utilized by ops. Too bad, because it’s the best demand signal we have. Ops – track it monthly, at every touchpoint, not just the shelf. Be relentless in SKU rationalization. Sales – don’t throw away that card that you got at Expo West, create liquidator relationships before you need them.

This means your demand planning has to communicate with your finance function and in most $20-30MM brands, those two teams are operating on totally different spreadsheets. And anyone who has worked with me has heard me say, many times: talking is not necessarily communicating.

A lot more to cover here in another post.

Which Brings me to the Rolling 13-week Cash Plan

I typically walk in to a client who has a cash forecast, but it’s really a P&L forecast with a cash tab. Not really the same thing. It also usually not visualized, which is a quick and impactful update to make.

What’s coming, what’s going, and when gaps widen are usually what the CEO needs, and again this should be a weekly conversation.

And I think the key way of thinking here is this: beyond 13 weeks, you’re forecasting. Within 13 weeks, you are planning. This is the period where you can truly affect change through habits.

Here’s a test: if your cash forecast shows you're going to be short in week 9, what do you do?

Do you know if you have room to draw on your LOC?

Can you call your top three A/R balances? If you know them well, ask for a solid, if you don’t, offer to increase the early pay discount as a one-off…I’ve seen it happen.

What about cutting a non-critical PO to your co-man? We’re long on Sea Salt Chips anyway.

Just quiet, tactical moves that keep a business solvent.

Conclusion

This stuff is fundamental. But knowing it and operationalizing it are different things. The difference between "we understand working capital" and "we have a system that manages working capital" is important. This post isn’t for everyone, but the message is: make liquidity a habit in 2026.