Cash flow · 2 min read ·
Five numbers every owner should review each month
Not a thick report. Five figures that tell you whether the month went the way you think.
Most owners get a stack of reports from their bookkeeper or CPA and put it in a drawer. Not because they do not care, but because thirty pages of accounting is not how anyone runs a business. You need five numbers, on one page, every month.
1. Cash in the bank, minus what is already spoken for
The balance on your banking app is not your cash. Subtract the payroll that runs Friday, the sales tax you are holding for the state, the credit card bill and the loan payment. What is left is what you actually have. Owners who know this number stop being surprised.
2. Who owes you money, and for how long
An aging report lists every unpaid invoice by how old it is. Anything over 60 days needs a phone call this week, not next month. This one report has found more cash for our clients than any financing ever has.
3. Gross margin
What is left from each sale after the direct cost of delivering it: materials, subcontractors, the labor on the job. If this number slips two or three points, something changed in pricing or in cost, and it will show up in cash a month later. Catch it here first.
4. Payroll as a share of revenue
Payroll is usually the biggest cost an owner controls. Watch it as a percentage, not a dollar figure. When the percentage climbs while sales are flat, you have added people ahead of the work. When it falls while sales grow, you may be about to burn out the team you have.
5. Your break-even month
The sales you need in a month to cover every fixed cost and pay yourself. It is the first number we build when an owner takes on something bigger, and it becomes the target every week is measured against. Every business has this number. Most owners have never seen theirs.
How to use them
Put the five on one page. Compare this month to last month and to the same month last year. Anything that moved more than you expected gets a question, and the question gets answered before the next month closes. That is the whole monthly meeting. It takes an hour.
What to do with this
- Available cash, not the bank balance.
- Receivables over 60 days get a call this week.
- Gross margin and payroll percentage move before cash does.
- Know your break-even month and measure every month against it.
Questions this answers
Available cash after commitments, receivables aging, gross margin, payroll as a share of revenue, and monthly break-even. Those five, on one page, tell you whether the month went the way you think it did.
Once a month, in an hour, with the same five figures each time. A quarterly step back to the bigger picture covers the rest.
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