Founder's Guide to Cash Flow Visibility
Cash is king. But most founders struggle to see their cash position clearly. They know money is coming in and going out, but they can't answer the critical question: "How much cash will we have in 30 days?"
Here's how to build real cash flow visibility—without the complexity.
Start with Your Bank Balance (But Don't Stop There)
Your bank balance tells you where you are right now. But cash flow visibility means knowing where you'll be.
Current balance: Know your actual bank balance today, across all accounts.
Pending transactions: Track checks written but not yet cashed, ACH transfers in flight, and credit card charges not yet posted.
Incoming cash: Identify all receivables and when you expect to collect them. Don't guess—use your actual payment terms and customer payment patterns.
Outgoing cash: List all known upcoming expenses: payroll, rent, bills, loan payments. Use your actual payment schedule.
Build a Simple Cash Flow Forecast
You don't need complex models. Start simple.
13-week rolling forecast: Show week-by-week cash position for the next 13 weeks. Update it weekly.
Three categories:
- Opening balance (last week's closing balance)
- Cash in (customer payments, loans, investments)
- Cash out (payroll, rent, expenses, loan payments)
Bottom line: Opening balance + Cash in - Cash out = Closing balance
Update weekly with actuals. Your forecast will improve over time as you learn your cash patterns.
Track Your Key Cash Flow Metrics
Not all metrics are equal. Focus on these:
Days of cash: How many days of operating expenses can you cover with current cash? Aim for at least 60-90 days.
Cash conversion cycle: How long does it take to convert inventory and receivables into cash? Shorter is better.
Burn rate: How much cash are you spending per month? Know this number—it's your runway math.
Collection period: How many days does it take to collect from customers? Track this and work to improve it.
Automate What You Can
Manual tracking doesn't scale. Automate where possible:
Bank feeds: Connect your accounting system directly to your bank. Transactions should flow automatically.
Payment tracking: Use tools that show pending ACH transfers and credit card authorizations.
Accounts receivable: Automate invoicing and payment reminders. Track when payments are due vs. when they arrive.
Accounts payable: Schedule payments through your accounting system. See upcoming bills and when they'll hit your account.
Scenarios and Planning
Visibility isn't just about seeing today—it's about planning for tomorrow.
Base case scenario: Your best guess of what will happen. Use this as your primary plan.
Worst case scenario: What if sales drop 30%? What if a major customer pays late? Model it.
Best case scenario: What if you land that big client? What if collections speed up? Plan for success too.
Run these scenarios monthly. Know what actions you'd take in each case.
Red Flags to Watch
Some signs mean you need to act fast:
Days of cash dropping below 45 days: Start fundraising or cut expenses immediately.
A/R aging increasing: Customers paying slower is a cash flow killer. Address it proactively.
Revenue growing but cash not: You might be growing your way into trouble. Review your pricing and payment terms.
Large customer concentration: If one customer represents >30% of revenue, their payment timing becomes critical.
The Bottom Line
Cash flow visibility isn't about perfect predictions. It's about having enough information to make good decisions. Start simple, track regularly, and refine your process over time.
When you can answer "How much cash will we have in 30 days?" with confidence, you've achieved visibility. Everything else flows from there.