Liquidity Crisis Triage: The First 72 Hours and Two Weeks

Executive summary

Liquidity crisis triage is the discipline of deciding, in the first hours of a cash shortfall, what gets paid, what waits, who gets called, and in what order. The goal of the first 72 hours is not to fix the business. It is to know exactly how much cash you have, when it runs out, and which obligations cannot be missed, so that every later decision rests on one trusted number.

Most companies in a cash squeeze lose time in two ways. They argue about a forecast nobody believes, and they let each function protect its own bills, so cash leaves in the wrong order. The sequence below fixes both. Build a daily cash view from bank balances, not from the general ledger. Sort every payable into critical, negotiable, and deferrable. Pull forward cash you are owed. Brief lenders and key vendors before they find out on their own. Then convert the daily view into a 13-week cash flow forecast and a stabilization plan with named owners.

This guide is operating guidance, not legal advice. Several steps here (paying some creditors ahead of others, talking to a lender, moving cash between entities, continuing to trade) can carry legal consequences that depend on your jurisdiction, your credit agreement, and your corporate structure. Involve counsel early, and read the credit agreement before you act on anything in it.

When to use this

Use this guide when any of the following is true:

• The most recent cash forecast shows a negative balance or a covenant or minimum-liquidity breach inside the next four to six weeks.
• You are delaying payroll-adjacent payments, holding checks, or choosing which vendor to pay "this week."
• A revolver is fully drawn, a borrowing base has shrunk, or a lender has reserved rights.
• A key customer has stopped paying, a large payment was lost, or a seasonal build consumed more cash than planned.
• A new owner or CEO has inherited a business and the first cash view shows less runway than the last board deck implied.

Do not use this as a substitute for a longer-term plan if cash is merely tight but the forecast is stable. In that case, start with the cash flow operating system playbook and the working capital playbook. Triage is for the situation where the next payment run is in doubt.

Diagnostic questions

Answer these in the first day, from bank portals, the AP and AR agings, and the credit agreement.

1. What is available cash today, by account and entity, from the bank portals and not the ledger?
2. Which balances are restricted, trapped in a subsidiary, pledged, or under a lender's control?
3. How much revolver availability is there, and what conditions (borrowing base, covenants, no default) govern a draw?
4. Which payments cannot be missed in the next 14 days: payroll, payroll taxes, rent, insurance, debt service, trust-type taxes?
5. Which vendors can stop shipment or service within days if unpaid?
6. Which large receivables have a stated or likely payment date this week, and which are blocked by an error or dispute?
7. What do the credit agreement and other debt documents say about reporting, notice of default, cure periods, cash dominion, and restricted payments?
8. Who can release payments today, and which standing payment runs are still active?

If you cannot answer questions 1 and 4 within a day, that is the finding. The first deliverable is the cash view, and everything else waits for it.

The framework: five lanes, run in parallel

Treat the first two weeks as five lanes, each with one owner, reviewed together every day for the first week.

Lane 1 feeds all the others. Do not brief a lender until Lanes 1 to 3 produce a number the company stands behind, because a lender who hears three cash figures in a week stops trusting any of them.

Hours 0 to 72: the sequence

Hours 0 to 8: freeze, centralize, and see

1. Centralize payment authority in two named people, one from finance and one from the CEO's office. Pause standing payment runs and recurring ACH batches until each is reviewed.
2. Pull same-day bank balances for every account in every entity: ledger balance, available balance, holds, and restrictions.
3. List what has already left: checks not yet cleared, ACH batches in flight, wires scheduled. These are committed cash.
4. Stop new commitments above a threshold you set today (purchase orders, hires, discretionary travel, non-binding capital projects), with a named exception approver.

Hours 8 to 24: build the daily cash view

The daily cash view is a day-by-day grid for 14 days, built from banks and documents, not from accrual accounting.

Closing cash(day) = Opening cash(day) + Receipts(day) − Disbursements(day)
Runway (weeks) = Available cash ÷ Average weekly net cash outflow
Funding gap = Minimum acceptable cash − Lowest projected closing cash

Opening cash is the unrestricted bank available balance. Receipts are only what you can name, customer by customer, with a date. Disbursements run payroll and taxes first, then debt service, rent, insurance and utilities, then vendors by class, then everything else. Set a minimum cash level explicitly, such as the next payroll plus a day of float, because without it "positive cash" is a comfortable fiction.

Mark every line Known (invoice or bank record in hand), Expected (counterparty confirmed), or Assumed (your estimate). A falling Assumed share is a better sign of progress than the headline balance.

Hours 24 to 48: classify payables and set the release rule

Work the AP aging vendor by vendor with Operations and Procurement. Your legal obligations may differ from what is operationally critical, so have counsel review the treatment of specific creditors before you act.

Ask of each vendor: is it sole source, does it hold a lien, statutory right, or the ability to stop shipment, and is it an insider or affiliate? Then set one release rule: critical payments release on the due date, and every other release needs both approvers and a one-line reason.

Hours 48 to 72: pull cash forward and prepare the message

Receivables acceleration. Work the top 25 invoices by amount, and for each record the owner, the blocker, the promised date, and the next action. Typical blockers are an invoice never sent or sent wrong, a missing PO number, an unrouted dispute, a customer approval cycle, and cash received but not applied. Fixing blockers is faster than pressure. See how to reduce DSO and the working capital playbook.

Other near-term sources, each with a cost: billing already earned under the contract, priced early-pay offers, sale of slow inventory, refunds already due, and pausing discretionary spend, which is the cheapest cash. Check the credit agreement first, because factoring or pledging receivables can breach negative covenants or lender liens.

Prepare the one-page brief: cash position at a stated time, the date cash falls below minimum in the base case, actions taken, the remaining gap, and the specific request, all from one set of numbers.

Days 4 to 14: the lender, vendor, and team sequence

The order of conversations matters, because each one should give the next person accurate information.

1. Board and sponsor first. They need the facts before outsiders do and may hold consents or be able to provide support. Route any equity or shareholder-loan discussion through counsel.
2. Counsel and the credit agreement before the lender. Read the notice, reporting, default, cure, and cash dominion provisions, and ask counsel what you may and may not say.
3. The lender, early and with a plan. Bring the daily view, the draft 13-week forecast, actions taken, and one specific ask: a waiver, amendment, extension, or forbearance. Ask for the lender's position rather than guessing.
4. Critical vendors, one by one, by phone with a decision-maker. Offer a dated schedule you can keep, and confirm it in writing. A promise kept twice beats a larger promise missed.
5. Negotiable vendors, with dated plans and consistent treatment of similar vendors.
6. Employees and key customers, with a plain, accurate message from the CEO. Promise nothing the plan does not support.

Keep a communication log of who was told what, when, and what was agreed.

What not to do

These are places to stop and call counsel, not legal conclusions.

1. Do not pay some creditors ahead of others without advice. Payments to insiders, affiliates, or favored vendors shortly before an insolvency process can be challenged later, depending on jurisdiction and facts. Paying a genuinely critical vendor to keep operating may be defensible, but record the reasoning and have counsel review it.
2. Do not ignore the credit agreement. Moving cash between entities, distributions, sponsor or management fees, asset sales, and new debt may be restricted, and a late notice can be a separate default.
3. Do not run payroll or statutory taxes short without advice. Trust-type taxes can create personal exposure for officers in some jurisdictions.
4. Do not keep taking deposits you may not be able to earn or repay without counsel's view on directors' and officers' duties.
5. Do not manage the story. Manage the number. Never reclassify or smooth figures to improve a covenant calculation or a lender report.
6. Do not sign personal guarantees or commit personal funds without independent advice.
7. Do not announce a rescue before the plan exists.

Directors' and officers' duties can widen as insolvency approaches and differ by jurisdiction. That is a reason to involve counsel in the first days and to keep board minutes showing an informed, documented process.

Worked example (illustrative)

The numbers are made up to show the method. They are not benchmarks and do not describe any company. Amounts are in thousands of dollars.

A distributor starts with $900 of available unrestricted cash. If everything is paid on its due date, the first two weeks look like this.

Total disbursements are $800 and $1,320. Cash runs out in week 2 by $420. Average weekly net outflow is (420 + 900) ÷ 2 = $660, so runway from $900 is 900 ÷ 660 = about 1.4 weeks.

Now apply assumed triage actions (not forecasts of what any vendor or customer will accept). Pay $100 of the $310 other-vendor amount in week 1 and $90 of the $290 in week 2 under dated plans, deferring $210 and $200, a total of $410. Collect an incremental $60 in week 1 and $140 in week 2 from the top-25 list, $200 in total. Hold everything else. Week 1 closes at 900 + 440 − 590 = $750, and week 2 at 750 + 560 − 1,120 = $190.

Closing cash of $190 replaces negative $420. If minimum cash is $250, a $60 gap remains, and $410 of deferred payables comes due after week 2. Triage bought roughly a week and surfaced the real problems: a residual gap and a deferred balance that the stabilization plan and the lender conversation must address. Deferral is borrowing from vendors, not savings, so it belongs on the cash view as a dated obligation.

From triage to the 13-week forecast and stabilization plan

By day 14 the objective changes from surviving the next payment run to running a forecastable business. The bridge is the 13-week cash flow forecast.

1. Tie weeks 1 to 4 to the daily view and to bank actuals, and keep the Known, Expected, and Assumed labels.
2. Put the deferred balance on the forecast as a dated payment schedule.
3. Show lender scenarios with and without any waiver or new money, and never put an unconfirmed lender action in the base case. Track headroom with covenant compliance headroom tracking.
4. Write the stabilization plan in three horizons: immediate cash actions (weeks 1 to 4), working-capital and cost actions (weeks 5 to 13), and operating changes that restore margin, as in the margin expansion playbook.
5. Set governance: a weekly cash meeting, a board variance report, and documented changes to the release rule, using the VCP governance charter template.
6. Exit triage deliberately, for example after four consecutive weeks of forecast accuracy within a tolerance you set and lender alignment on the plan.

Common mistakes

1. Using the ledger instead of the bank. Symptom: the board deck cash differs from the bank portal.
2. Forecasting receipts from averages. Symptom: one large customer's slip creates a surprise.
3. Treating deferral as savings. Symptom: the deferred list grows and nobody has a repayment date.
4. Paying whoever calls loudest. Symptom: similar vendors treated differently with no documented criteria.
5. Quoting different numbers to different parties. Symptom: the sponsor, lender, and CFO each cite a different cash balance.
6. No minimum cash. Symptom: "we are positive" until payroll fails to fund.
7. Skipping counsel. Symptom: the first legal conversation follows a creditor's demand.

AI prompt assistance

AI can organize data and draft. It is not legal advice and cannot confirm what your credit agreement says. Supply the data yourself, verify output against the bank and the documents, and have counsel review anything involving creditors or lenders.

1. Build the first daily cash view.

I will paste today's bank balances by account, the AP aging, the AR aging, the payroll calendar, and debt service and rent dates. Build a 14-day daily grid with opening cash, receipts, disbursements by category, closing cash, and headroom against a minimum cash of [amount]. Label each line Known, Expected, or Assumed, and list every assumption.

Check: tie opening cash to the bank portal and recompute two days by hand.

2. Quote the credit agreement provisions that matter.

Here is our credit agreement. Quote exactly, with section numbers, the provisions on reporting, notice of default, cure periods, cash dominion, restricted payments, and affiliate payments. Do not interpret whether we are in default.

Check: counsel reads the quoted sections. Never act on an AI summary of a legal document.

Implementation guide

Governance: the CEO owns the plan, the CFO owns the number, the Controller owns the release rule, Operations owns the criticality call, and counsel owns advice on creditors, directors' duties, and the credit agreement. Report to the board weekly during triage. The daily view usually changes the picture within a day, because the first honest number differs from the one in circulation. Do not promise a recovery date in the first fortnight.

Related resources

• 13-week cash flow forecast template: the forecast that replaces the daily view after the first two weeks.
• Cash flow operating system playbook: the standing cadence that prevents the next squeeze.
• Covenant compliance headroom tracking: watching the lender's tests while cash is tight.
• Working capital playbook: the structural levers on receivables, payables, and inventory.
• How to reduce DSO: a 90-day collections plan: the receivables mechanics behind acceleration.
• Margin expansion playbook: restoring operating cash generation.

Frequently asked questions

What is liquidity crisis triage?

Liquidity crisis triage is the short, structured process of establishing real cash, deciding which payments are critical, pulling forward receipts, and briefing lenders and vendors, usually within the first 72 hours to two weeks. Its purpose is to buy time and create one trusted cash number, so that a longer stabilization plan can be built on facts.

How do you build a daily cash forecast when cash is running out?

Start from bank available balances, not the ledger, and build a day-by-day grid of named receipts and disbursements for 14 days. Label each line Known, Expected, or Assumed, set an explicit minimum cash level, and compare closing cash to it daily. Extend to a 13-week forecast once the first four weeks tie to bank actuals.

Which payables should you pay first in a cash crisis?

Pay what stops the business if unpaid: payroll, statutory and trust-type taxes, critical sole-source suppliers, and obligations your debt documents require. Treat taxes, insider payments, and lender-related items as restricted until counsel advises. This is operating guidance, not legal advice, and the right order depends on your facts and jurisdiction.

When should you talk to your lender?

Talk to the lender early, once you have a single reliable cash view, a short-term plan, and a specific request, and after counsel has reviewed the credit agreement. Waiting until a payment is missed removes options. Bring one set of numbers, and avoid commitments the plan cannot support.

Can paying some creditors first create legal risk?

Yes, it can. Depending on the jurisdiction and facts, payments to insiders or favored creditors shortly before an insolvency process may be challenged, and directors' and officers' duties can widen as solvency becomes doubtful. This is not legal advice. Involve counsel early, read the credit agreement, and document why each payment decision was made.

How this works in a System of Performance

A triage fails when the daily cash view, the payables decisions, the vendor promises, and the lender requests live in different spreadsheets and inboxes. A Performis routine can take on a recurring job like this, with the scope and fit agreed with you: it works from the records your team supplies, prepares the work for your named reviewer, and keeps each approval on record. To see how much of your cash view is Known rather than Assumed, bring it to us as a launch partner.