Even the sharpest operators fall into thinking traps. When it comes to managing cash flow – deciding who to extend terms to, when to chase, and how tight to pull the reins – gut instinct plays a huge role.
But gut alone isn’t enough.
In high-stakes moments, bias creeps in. And without data to check it, those blind spots can become real financial risks.
This isn’t a call to ignore your instincts. It’s a reminder to back them up.
The 3 Biases Costing You Money (Without You Realising)
1. Confirmation Bias
You’ve got a ‘feeling’ about a client. They’ve always come good. So you filter every piece of data to support that belief – ignoring the signs that they’re slipping.
2. Optimism Bias
“They’ll pay. They always do.” Until they don’t. Overconfidence in your receivables timeline can leave your cash flow stretched too thin, too long.
3. Loss Aversion
You’re hesitant to change payment terms or tighten credit policies – not because it’s the wrong move, but because you’re afraid of upsetting a relationship or missing future revenue. The pain of a potential loss outweighs the logic of reducing risk.
Why This Matters Now
Cash flow decisions don’t just live in spreadsheets. They happen in conversations. In moments of pressure. In quiet assumptions that go unchallenged.
Bias isn’t a flaw… it’s human. But left unchecked, it can distort how we assess risk, trust clients, and respond to warning signs.
The smartest operators know this. They build habits and cultures that check instinct against evidence.
Final Thought: Gut + Data > Gut Alone
You don’t need to abandon your instincts. But you do need to test them.
Not once a quarter. In real time. Because it’s not the bias you know about that gets you, it’s the one you forget to look for.