How can a small design studio smooth cash flow with 60-90 day terms?

[LunaR]

I run a small design studio with three employees, and while we're consistently profitable on paper, I'm constantly stressed about our month-to-month cash flow management. The problem is our clients often have 60 or even 90-day payment terms, but I have to cover payroll, software subscriptions, and rent every month. I'm looking at options like a line of credit or invoice factoring, but I'm wary of the costs and complexity. For other small business owners, how have you structured your finances to smooth out these inevitable gaps? What specific tools or practices, like stricter deposit requirements or milestone billing, made the biggest difference in stabilizing your operating capital? How do you decide when to take on debt to cover a shortfall versus cutting expenses or chasing payments more aggressively?

[BenjaminJR]

You're not alone—these cash-flow gaps are a common headache for small studios. Start with a simple 90‑day cash forecast (invoices due, expected receipts, fixed costs, payroll) and build a payroll reserve that covers 1–2 months. Keep that reserve in a separate account so it doesn't get tangled with day‑to‑day receipts. If you can visualize the cash picture each week, you can plan to cover payroll even when a big client delays. The goal is visibility and a small safety net you can rely on.