• 1. Count your startup costs before you open
  • 2. Work out your break-even point

Liquidity, for a new business, means having cash on hand when bills are due, not only profit on paper. Before you open, count what it costs to start, work out how much you need to sell to cover your costs, and plan your cash month by month. Once you're trading, invoice with clear due dates, follow up on what's late, and look at the numbers every month.

Billed publishes this page. The SBA statements below are quoted from SBA pages checked October 31, 2026. Billed's features are quoted from Billed's own pages. This isn't financial advice: ask an accountant about your own figures.

This page is about the first months of a business. For a week-by-week forecast once you're trading, see how to manage cash flow. For the ratios that measure liquidity, see what is liquidity.

1. Count your startup costs before you open

The SBA's guide to calculating startup costs (US, checked October 31, 2026) says: "Before your business opens its doors, you’ll have bills to pay. Understanding your expenses will help you launch successfully." List one-time costs, such as equipment and deposits, apart from the costs that repeat every month, such as rent, software and insurance. The one-time list tells you how much cash leaves before the first sale.

2. Work out your break-even point

The same SBA page (US, checked October 31, 2026) gives the formula "Fixed Costs ÷ (Price – Variable Costs) = Break-Even Point in Units". It also says that "some companies may take years before turning a profit, often losing money in the first few months or years before breaking even." Use the formula to see how many sales cover your monthly costs, and compare that number with what you expect to sell in the first months.

3. Plan your cash month by month

Write down your opening cash, then for each month subtract what you'll pay out and add only the money you expect to receive that month. The lowest month-end balance is the number to watch. The worked example below shows the layout.

4. Know when a sale turns into cash

An invoice isn't cash until the client pays it. The SBA's guide to managing your finances (US, checked October 31, 2026) explains the two ways of recording a sale: "For example, if you make a sale in January and receive the $200 payment in February, an accrual method would allow you to record that on January’s books, while the cash method would require that payment to land on February’s books." In your cash plan, put each payment in the month you expect to receive it.

5. Invoice promptly, with a due date, and follow up

Send each invoice when the job is finished, with the payment date written on it. Billed's invoice software page says: "Set a due date on each invoice so your client knows when to pay. Invoice reports show which invoices are paid, partially paid or past due, and you can see who owes you money and send them a payment reminder." If some clients pay you the same fee every month, Billed's recurring invoices page says: "Negotiating fixed prices and sending recurring invoices makes it easier for you to forecast your income and upcoming workload."

6. Weigh cash against other ways to pay for equipment

Before you pay for equipment in one go, compare the options. The SBA's guide to managing your finances (US, checked October 31, 2026) says: "If you buy your assets with cash, you’ll own it in full right away. But it also means you’ll have less cash available to cover operating expenses." It also discusses leasing as an alternative. Ask your accountant which option fits your plan.

7. Review the numbers every month

Pick a fixed day each month to compare the cash plan with what happened, and update the next months. Billed's financial reporting page says: "See your partially paid, past due and paid invoices in a glance with Invoice reports. This lets you keep track of your cashflow." For profit as well as cash, the same page says: "See how profitable your business is with Income vs Expense report."

Worked example: a three-month cash plan (sample figures)

Sample figures only, not a recommendation. A new design studio opens with $15,000.00 in its business account. It pays $6,000.00 of one-time startup costs in month 1 and $2,500.00 of fixed costs every month. Clients pay $1,200.00 in month 1, $2,800.00 in month 2 and $3,900.00 in month 3, each figure counted in the month the money arrives.

  • Month 1: $15,000.00 − $6,000.00 − $2,500.00 + $1,200.00 = $7,700.00
  • Month 2: $7,700.00 − $2,500.00 + $2,800.00 = $8,000.00
  • Month 3: $8,000.00 − $2,500.00 + $3,900.00 = $9,400.00

The lowest month-end balance is $7,700.00, in month 1, when the startup costs fall. If a client paid a month later than planned, that payment would move into the next month's line. Use your own figures and timing.

When this guide isn't for you

This page is for owners setting up a small business. If you're managing cash for a larger company with lenders or investors, or you need a forecast for a loan application, work with an accountant on a full cash flow forecast.

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Frequently Asked Questions

What does liquidity mean for a new business?

Having cash available when bills fall due. A business can show a profit on paper and still run short if clients pay later than its costs are due.

How do I work out my break-even point?

The SBA's guide to calculating startup costs, checked October 31, 2026, gives the formula "Fixed Costs ÷ (Price – Variable Costs) = Break-Even Point in Units". Put in your own monthly fixed costs, your price and your variable cost per unit.

Does a sale count as cash when I send the invoice?

Not for cash planning. The SBA's guide to managing your finances, checked October 31, 2026, says that under the cash method a payment received in February lands "on February’s books" even if the sale was made in January. Plan each payment for the month you expect it to arrive.

How can Billed help me see who owes me money?

Billed's invoice software page says: "Invoice reports show which invoices are paid, partially paid or past due, and you can see who owes you money and send them a payment reminder."

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