The secret to cash flow awesomeness

Imagine walking into a store without really knowing whether your card would be declined. Cue the anxiety right?

?

Now imagine owning a business and not knowing how much cash you had and whether you could pay next month's bills, taxes and payroll. Yet somehow, we continue to meet new clients that aren’t regularly performing cash flow analysis.

3 cash flow KPIs to include in your analysis:

1. Cash Runway

2. Net Operating Cash Flow

3. Free Cash Flow

?

Cash Runway

Vital for your finance team to understand cash runway to:

• Pinpoint cash flow issues early on
• Make better decisions about your short and long term cash plans
• Better communicate with investors and lenders sooner

I just got an investor update from a startup with $17M in revenue. They have just 5.5 months of runway left. Can you imagine? The founder has been building this company since 2014.

-Greg Isenberg, CEO Late Checkout

Net Operating Cash Flow

Essential to forecasting future cash flow and helps your finance team:

• Evaluate company’s financial health
• Assess core profitability of your business operations
• Make cash decisions
• Highlight future cash flow issues or opportunities

Free Cash Flow

Helps your finance team know how much cash is available for:

• expansion
• paying dividends
• debt repayment

How to Use Cash Flow Analysis to Make Informed Decisions

Monitoring these cash flow KPIS is can be a proactive financial strategy for a number of scenarios and stakeholders:

• Business executives?and?CFOs?can use FCF and NOCF to monitor company health and guide plans for?business expansion?or reinvestment.
• Creditors?and lenders?use FCF to ascertain how much debt your company can take on.
• Investors?and shareholders?use FCF to understand how much cash your company can generate and how much is available to distribute.

Learn more about cash flow KPIs >

Need help creating reliable reporting for these cash flow KPIs? Send me a message and we'll chat!