Our annual Cash Flow Compass report shows that 94% of small and medium sized businesses expected growth in 2025, with nearly a third aiming for over 20% revenue gains. Yet, more than half have less than 31 days of runway and 88% were hit with unexpected cash flow issues in the past year.
Cash flow challenges aren’t always caused by a lack of oversight. They can also be the result of facing new and unexpected realities—shifting policies, trade uncertainty, and rising costs—all at once (looking at you, Q1 of 2025). The struggles of gaining visibility into business numbers and maintaining liquidity add further complexity, as profit is often tied up in delayed payments and recurring expenses.
So, how can business owners anticipate shortfalls and act before the next cash flow crunch hits? By having systems in place that tap into AI. Modern solutions can spot patterns and model multiple scenarios to help companies turn cash flow management from a reactive scramble into a proactive strategy.
Why cash flow crunches blindside small businesses
Traditional accounting looks backward, not forward
Most small businesses rely on traditional accounting methods that track what has already happened rather than what’s coming next. Balance sheets and profit-and-loss statements are important, but they’re static snapshots. They won’t anticipate the future (handy for taxes, not so handy for next Tuesday).
This is problematic, considering that our research shows only 31% of growing businesses say they’re actively optimizing their cash flow. The rest are in reactive mode, chasing late payments or navigating surprise fees without a buffer.
In a volatile economy where demand shifts overnight, supply chains break down, and interest rates rise without warning, historical reporting leaves business owners unprepared. And without forward-looking tools, even the most profitable businesses can get caught off guard.
Business owners juggle dozens of variables
Even if you want to plan ahead, you’re often up against a reality that feels impossible to manage manually. Cash flow is influenced by multiple moving parts: payment terms, staffing costs, supplier invoices, tax deadlines, loan repayments, seasonal demand, and unexpected expenses.
Individually, each variable seems manageable. Together, they create a complex web that’s hard to track in real time. Just one snag—a late customer payment, a forgotten renewal, or a sudden rent increase—can throw the entire system off balance. Cue the 3 a.m. spreadsheet session.
That’s why so many business owners end up reacting instead of anticipating. They’re not lacking discipline. They’re simply stretched thin, with too many demands competing for attention and too few tools to connect the dots before a crunch hits.
How AI spots problems before you do
The difference between reacting to cash flow shocks and staying ahead of them often comes down to pattern recognition and foresight. This is where AI steps in—not to replace business owners, but to support them by catching red flags early and surfacing insights that are easy to miss when you’re juggling everything else.
The upside is significant. A McKinsey analysis found that companies adopting AI early could see a cumulative 122% cash flow improvement, compared to only 10% for those who lag behind. That gap adds up fast.
And the trend is already underway. Our report shows that 64% of business owners would trust AI to manage their cash flow, and nearly one in three are already using the tech. Gartner’s research points to the same momentum, with 58% of finance teams adopting AI in 2024—up 21 percentage points from 2023 (not exactly a fringe experiment anymore).
Here’s how you can benefit, too.
Pattern recognition
AI can quickly scan your financial data for recurring trends—like seasonal revenue dips, rising utility costs, or recurring subscription renewals that pile up month after month. By surfacing these patterns, it helps you prepare for predictable swings rather than being caught off guard—again.
Predictive insights
Beyond spotting trends, AI systems can forecast what’s likely to happen next. For example, they can flag clients who have a history of paying late, anticipate upcoming expense spikes, or identify when your runway may shrink below a safe threshold. Instead of reacting after the fact, you can take steps to preserve liquidity before it’s urgent.
Scenario modeling
What if your largest client delays payment by 30 days? What if shipping costs double? What if you need to bring on new staff earlier than planned? Simulations allow owners to test scenarios and see the financial ripple effects in real time. That means you can weigh trade-offs, plan for contingencies, and make smarter, calmer decisions instead of scrambling under pressure.
By combining these capabilities, AI becomes less of a nice-to-have and more of a survival tool. It creates the space for business owners to focus on growth, strategy, and customer relationships—while the system keeps an eye on the numbers.
Turning predictions into actionable decisions
Spotting problems before they happen is only half the battle. The real advantage comes from translating early warnings into decisive moves that protect your runway and keep your business steady. Our report backs this up: the most stable businesses aren’t the biggest or most profitable—they’re the ones with systems in place. With the right insights, business owners can pivot quickly and make choices immediately rather than in hours, days, or even weeks.
Take collections, for example. If AI flags a pattern of late payments from a major client, you don’t just wait and hope for improvement. You tighten your follow-up cycle, offer small discounts for early payments, or adjust contract terms before cash dries up. For many, the cost of not acting is steep: 76% of small and medium sized said cash flow challenges held them back last year, with nearly a third missing out on opportunities that could have fueled their growth (ouch).
Or, consider discretionary spending. If scenario modeling shows a dip in revenue coinciding with a big marketing push, you can delay that campaign by a few weeks, preserving liquidity until the timing is safer. Rather than reacting in a panic, you’re choosing where to press pause with intention.
The same applies to hiring decisions. Growth projections might look strong on paper, but if forecasts show payroll will stretch cash flow too thin, you can stagger hires or lean on contractors until collections catch up. That way, you expand capacity without betting the house on cash that hasn’t arrived yet. Future-you will thank you.
Staying ahead of cash flow crunches
AI is leveling the playing field for small businesses that have carried the burden of cash flow headaches armed only with grit, creativity, and optimism. It now gives them what traditional accounting alone can’t—surfacing trends early, modeling scenarios, and providing the clarity to act before cash flow issues spiral.
The impact goes well beyond cash flow. An IBM study found that one in four companies credit AI with driving more than half of their revenue growth and improving operating margins by over 50%. Nearly two-thirds of budgets are now allocated to AI for core functions, underscoring how quickly the tech has shifted from exploratory to essential in business strategy—well past “pilot”.
But technology alone isn’t enough to deliver these outcomes—the foundation is built on trust. Business owners need to know their financial partners are safeguarding both money and data.
As the financial landscape grows more unpredictable, business owners need greater foresight and control. By combining forward-looking tools with partners committed to security and transparency, you can navigate uncertainty without losing focus on growth—or losing your weekend.
