never done it before... whens the right time?

you won't get money for a scholarship you open by cutting a player until after the following season. If you fill the scholarship with the money you already earned, you'll never get that extra money...

That is correct - you don't get extra cash.

You can cut a guy right up until signings, so when I have done it, I wait until a cycle or two before signings to make sure I have enough cash to sign everyone I want.

I wait until the last minute before I cut, in case the ding on my reputation interferes with recruiting (it hasn't yet - cut 4 guys in 2 years and I'm still A- ).

But I've started using cuts as a way to balance my classes.  I cut 2 players last cycle in order to give myself 3 scholarships next cycle, including my current lone senior.  I generally don't like to cut players, but I signed a lot of sub-par players my first 2 seasons (as did the Sim AI before I took over) and I'm trying to undo that damage.  I don't get budget money for those cut slots until the following full cycle.

I have 2 players to cut.  When does that option become available?

You will definitely be able to cut them when recruiting starts.  You can't cut them after signings begin.

You can cut them prior to recruiting starting. As soon as the rosters roll I believe you have the option to cut.