Our sales pipeline is full and our operations team is working at maximum capacity with all green metrics, yet we are facing a severe cash flow crunch and struggling to make payroll. How can our weekly scorecard be completely green while our actual bank balance is in jeopardy?

Question

Tyler Smith · Accepted Answer

This is a classic blind spot for growing companies. Your scorecard is likely tracking operational volume and sales activity but ignoring the vital connection between work completed and cash collected. When your company is scaling rapidly, you can easily grow your way into bankruptcy by working yourself to death without collecting the cash.

To fix this, you must introduce leading indicators for liquidity on your weekly scorecard.

First, track accounts receivable aging. Specifically, look at the dollar amount of invoices that are more than thirty days past due. If this number is growing, your cash is trapped in your clients bank accounts.

Second, track average days sales outstanding. This tells you how long it takes to get paid after a sale is completed.

Third, track billable milestone achievement. If your contracts are tied to milestones, track the number of milestones achieved and billed weekly. If your operations team is completing work but not triggering the billing milestones, your scorecard will show green for delivery while your cash flow dries up.

Running on data means tracking the flow of cash, not just the flow of work. Add these liquidity metrics to your weekly scorecard, assign them to your financial leader, and you will never be surprised by a dry bank account again.