What to do when you’re out of cash and payroll is due
👋 Hi, it's Jonah, and I’m here with a 🔥 edition of The Midnight Text, Forum Ventures’ bi-weekly newsletter that gives honest answers to the unspoken questions that keep founders awake at night.
I’m a 3X founder turned investor, with over 20 years of experience building startups across Canada and the US. I bootstrapped my first company to acquisition, raised eight figures for my second, and now, as a Managing Partner at Forum Ventures, I support early-stage B2B software founders in building companies that actually work. I also lead Forum’s AI Studio, where we launch eight AI-native startups a year from day zero to seed.
Up today:
What do you do when you’re out of cash and payroll is due in four days?
Rule #1: Don’t run out of cash.
I broke that rule.
Ten years ago, I was running Limelight, a venture-backed company doing $25K–$30K/month. Our biggest client was Scotiabank, one of the Big Five banks in Canada. Big logo. Big contract. But big banks move slowly.
We were waiting for their first check. It got held up in KYC limbo.
It was Tuesday. Payroll was Friday. The money wasn’t coming.
I called Mike.
Mike Cardamone had been my Managing Director when I went through the Forum Ventures accelerator in 2014, and we stayed close afterward. He was the investor on our cap table that I knew I could go to with real shit and get actual, tactical advice.
Here’s what we mapped out together, and what I’d tell you if you ever find yourself in the same spot:
1. Factor your receivables. Ask someone who knows who will actually do it.
Most factoring firms won’t touch anything under $500K. You need people who specialize in smaller early-stage invoices. Mike introduced me to two. That made all the difference.
2. Convert monthly contracts to annuals, even at a discount.
Find your most loyal customers and ask them to lock in for the year. It’s better to take a haircut on revenue than miss payroll.
3. Raise a short-term bridge, and don’t sound desperate.
We landed $50K from an investor by showing traction, not panic. We had a big client, real revenue, and a delay, not a crisis. Yes, we had to price them in….but beats the hell out of missing paychecks. Lead with the opportunity, not the fear.
4. Game out the worst-case scenario, and talk to your team early.
I had to tell a new senior hire who just left a steady, high-paying job that we might miss payroll. It sucked. But telling him Tuesday was better than blindsiding him Friday. We kept his trust.
5. Finance any government receivables you have.
SR&ED credits, grants, tax refunds — this is as close to guaranteed money as it gets. If it’s approved and just waiting to hit your account, treat it like a near-cash asset. These can often be financed by investors, friendly angels, or alt lenders. You don’t need a full finance team, literally anyone in your network with some cash can do it - it’s risk free.
I didn’t get paid that month. That’s just startup life. But we made payroll, kept the company alive, and bought time to figure things out.
Founders talk a lot about resilience. But real resilience is tactical. It’s knowing what levers to pull, who to call, and how to lead through moments that could easily break you.
This was one of those moments. If you hit one too, don’t panic. Get scrappy. Get real. And get someone on your side who knows what to do.
— Jonah
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