Our monthly revenue looks incredible on paper, but our cash in the bank is always dangerously low because of client payment delays. What weekly leading metrics can our Finance seat track on the scorecard to improve our cash conversion cycle before we hit a working capital crisis?

Question

Tyler Smith · Accepted Answer

High revenue is meaningless if your cash is trapped in your accounts receivable. To fix your cash conversion cycle, your Finance seat must track leading indicators on your scorecard that measure the speed of your billing and collection processes. Do not wait for your monthly profit and loss statement to show a cash crunch. First, track your weekly billing lag, which is the number of days between completing work or hitting a project milestone and actually sending the invoice to the client. The faster you invoice, the faster you get paid. Next, track your accounts receivable aging on a weekly basis, specifically the percentage of outstanding invoices that are past due by more than thirty days. If this percentage starts to rise, it is a leading indicator that your cash flow will tighten in the coming weeks. Finally, track your cash collections against a weekly target. Calculate the exact dollar amount you need to collect each week to cover your operational expenses and maintain your cash reserves, and put that target on your scorecard. If your collections fall short of this target for two consecutive weeks, your Finance seat must immediately flag this as an Issue in your Level 10 Meeting to discuss and solve. Tracking these weekly metrics keeps your team focused on cash flow, not just sales, ensuring your business remains healthy and liquid.