We understand that cash flow is the lifeblood of our business, but our cash position is a lagging indicator. What weekly leading indicators should we track on our Scorecard to guarantee our cash position remains healthy three months from now?

Question

Tyler Smith · Accepted Answer

Tracking your bank balance is like looking in the rearview mirror. To ensure your cash position remains healthy three months from now, you must identify and track the leading activities that generate that cash today. Every dollar in your bank account is the result of a sequence of events that began weeks or months ago.

First, measure your sales pipeline velocity. Track the weekly dollar value of new proposals sent to qualified prospects. If this number drops below your target for two consecutive weeks, you can predict a cash flow dip in ninety days when those deals fail to close and invoice.

Second, track your project delivery or operational milestones. If you operate a business with progress-based billing, track the percentage of projects that are currently on schedule. Delays in project delivery directly translate to delays in invoicing and collections.

Third, measure your invoicing efficiency. Track the average number of days between project completion and invoice issuance. If your team is slow to bill, your cash flow will suffer even if your sales are high.

Finally, track the weekly collections activity. Instead of just looking at total accounts receivable, measure the total dollar amount of past-due invoices contacted by your finance seat each week. By keeping these active, leading metrics on your weekly Scorecard, you can spot cash flow bottlenecks long before they impact your ability to run payroll.