Cash (Flow) is King
Throughput Show Episode 9 featuring Mike Payne, Jon Hughes, and Phil Hanke (originally aired 10/31/2025)
On this week’s episode of the Throughput Manufacturing Show, I sat down with Mike Payne, a manufacturing business owner who lives in the cash-flow trenches every day. Mike partners with accounting experts Jon Hughes and Phil Hanke from CLA to teach manufacturers how to avoid the most common cash-flow pitfalls and build the habits that keep companies alive.
Cash flow isn’t exciting to most people—but as Mike put it, it’s the lifeblood of a business. You can have all the opportunity in the world, but if you don’t manage cash, you can still die quickly. This episode takes a practical, no-nonsense look at how manufacturers should be quoting, pricing, negotiating, planning, and forecasting with cash in mind.
1. Why Cash Flow Is More Complicated for Manufacturers
Mike opened the conversation by naming a reality everyone in the industry feels: manufacturers often deal with long payment terms from large OEMs. Net-90 terms are common. Sometimes it’s worse. And while revenue might look great on paper, you can easily end up floating months of labor, material, and overhead before cash shows up.
That mismatch between work completed and cash collected can break a business if leaders don’t understand the cost of terms and price work appropriately.
Mike emphasized that shops must factor payment timing into pricing, quoting, inventory decisions, and overall cash strategy. If you don’t bake cash-flow costs into your job costing, you are losing money even when margins appear strong.
2. Understand the Cost of Terms—And Price Correctly
Manufacturers often amortize tooling and setup costs across long production runs, assuming larger batches mean higher margin. But if you carry six months of inventory to get that efficiency and don’t price for the cash you’re tying up, the savings disappear.
Mike encouraged shops to calculate:
The true cost of inventory you’re holding
The cost of long customer terms
The cost of paying vendors before you get paid
The risk of tying up cash in slow-moving parts
It’s not just about negotiating terms—though that helps when possible. It’s about understanding the financial impact so you can quote jobs accurately.
3. Improve Receivables: Speed Matters More Than You Think
Jon Hughes and Mike talked about how simple administrative decisions affect cash flow. One example: their shop added a week to their cash-flow cycle because they were mailing invoices instead of sending them electronically.
Another issue: incorrect or missing paperwork. If parts arrive without proper certs or inspection documents, the customer won’t receive them in their system—and won’t pay the invoice until someone notices the mistake.
A slow internal process creates a slow cash-flow cycle.
4. Strengthen Payables: Use Vendor Terms Strategically
Mike shared that while he often can’t negotiate better receivable terms from Fortune 500 OEMs, he has been successful negotiating occasional extended terms with his vendors on large, one-time material orders.
If you maintain strong vendor relationships and pay predictably throughout the year, suppliers are often willing to help on big purchases. Used sparingly, this can remove major cash-flow spikes.
The key is partnership. Vendors are more flexible when they trust you.
5. Ask for Upfront Deposits or Customer-Funded Material
Paul Van Metre added that shops should not be afraid to ask for NRE fees, tooling deposits, or material money upfront—especially when out-of-pocket costs are significant. Customers who see you as a strategic partner will often agree, and the impact on cash flow can be substantial.
Mike agreed, noting he has been able to secure upfront material support—even when he couldn’t negotiate better payment terms.
6. Preventative Maintenance Is a Cash-Flow Strategy
Jon raised a point many shops overlook: equipment failures are cash-flow events. Lack of preventative maintenance leads to unexpected repair bills and lost production time—both of which choke cash.
A good PM plan protects machines and your money.
7. The 13-Week Cash-Flow Forecast: Your Most Important Tool
Toward the end of the conversation, Jon and Mike introduced the 13-week cash-flow model—a simple weekly projection that helps leaders understand when cash comes in, when it goes out, and where gaps will appear.
Mike said it plainly: this is one of the most important habits a business owner can build. He personally stays close to it because cash flow is too critical to delegate completely.
You can survive mistakes in many areas. You can’t survive running out of cash.
Key Takeaways / Best Practices
Long customer terms destroy cash if you don’t price for them.
Inventory decisions must include cash-flow cost, not just machine efficiency.
Fix administrative bottlenecks: slow invoicing equals slow cash.
Missing paperwork delays payment—tighten shipping processes.
Build strong vendor relationships so you can request extended terms when needed.
Don’t be afraid to ask for NRE or material deposits upfront.
Preventative maintenance protects cash as much as equipment.
Use a 13-week cash-flow forecast and stay close to it.
Cash flow is the lifeblood—leaders must manage it intentionally.
Q&A From the Episode
Q: What’s the biggest mistake shops make when thinking about cash flow?
A: Pricing jobs without understanding the cost of customer terms, inventory carry, and cash timing. A job can look profitable on paper while quietly draining cash.
Q: How should owners think about delegating cash-flow responsibilities?
A: You can delegate preparation, but not ownership. Even with a controller, leaders must stay close to cash because it determines survival.
Q: What’s one habit every shop should build immediately?
A: Using the 13-week cash-flow tool weekly and forecasting payables, receivables, and timing with discipline.