What has the board already committed its capital to?

There is cash in the bank, and the next proposal looks affordable. The board approves it. Several months later, payments fall due on an earlier acquisition, a property project needs its next instalment and a guarantee becomes a live concern.

Nothing in that illustrative sequence requires a surprise loss. The pressure comes from commitments made at different times, considered in different papers and never brought together clearly enough.

A healthy cash balance can be a poor guide to how much room the board still has to make choices.

Look past what has already been paid

Start with the obligations that will draw on cash over time. These may include contracted capital expenditure, debt repayments, acquisition payments and commitments to investment funds. Their timing and conditions matter as much as their headline value.

Alongside these, identify exposures that could require support if circumstances change: guarantees, disputed claims or arrangements under which another party can call for payment.

These items do not all belong in the same accounting category, and they should not be added together without explanation. The board needs a decision view that distinguishes firm payments, conditional obligations and expectations that remain open to negotiation.

Ask where the money sits

Group cash is rarely one unrestricted pot. Money may sit in an entity with its own creditors, minority shareholders, financing restrictions or operating needs. Moving it can require approvals and take time.

A consolidated number can therefore create confidence that the company making the payment cannot share. Directors should ask which entity owes the money, which entity holds it and what must happen before the two can meet.

Finance and legal advisers should explain material restrictions in language the board can use. An assumption that funds can be transferred is too important to leave buried in a spreadsheet.

Put the commitments on the same calendar

Consider what happens if expected receipts arrive late while several payments fall due together. Include the operating cash the business needs to keep functioning. Identify which outflows can genuinely be delayed, at what cost and by whose agreement.

Also distinguish committed financing from a lender's encouraging conversation. A planned refinancing should be visible as an assumption, with its conditions and timing, rather than treated as cash already secured.

The purpose is to expose a shortage while there are still practical responses available. A long list of obligations without dates or owners will not do that.

Make every new approval update the picture

Before the board accepts another material commitment, show its effect on the existing schedule and on the room left for setbacks. Set a threshold for returning to the board if timing or exposure changes.

Someone should own the combined record and reconcile it with the underlying contracts and finance reports. The board should know when it was last checked.

The useful closing question is straightforward: after this decision, what will we still be free to do? Answering it requires more than looking at today's balance.