Why do we need to pay attention to cash management and cashflow during a project?

Here is an example: Your project requires $100K, and during the negotiation with the client or your company's top management (who will be funding the project), you agree to the following payment schedule: $30K upfront, $30K upon the completion of Milestone 1, and $40 at the end of the project.

However, for the completion of Milestone 1, the project costs are $50K, and the other $50K is required to pay the rest of expenses incurred on the project. What will happen with your cash during the first part of the project? What should you have done differently in the negotiation of the payment schedule?