The problem: you have cash, but you don’t have permission to spend it
Most companies can produce a cash number. Fewer can produce the cash number they’d bet payroll on.
The gap is usually not accounting skill. It’s definition, timing, and commitments.
Think of:
- Cash as oxygen (you don’t notice it until it thins).
- Working capital as gravity (it’s always pulling—inventory, receivables, prepaid, “we’ll invoice later”).
So the question isn’t “How much cash do we have?” It’s: How much cash is decision‑available today?
Decision Cash: a clean definition
Decision Cash is the amount of cash that is spendable today after you subtract cash that is already spoken for or not actually yours (yet).
A practical definition:
Decision Cash = Bank Cash (cleared) − Restricted/Held Cash − Committed Outflows + Reliable Near‑Term Inflows
Where “reliable” is not a vibe. It’s a rule you choose and enforce.
This is intentionally different from:
- Book cash (GL timing can lag reality)
- Bank balance (includes money you can’t safely spend)
- Free cash flow (useful, but not a daily decision instrument)
The three time horizons executives actually use
If you want cash to become steerable, you need three horizons on one page:
- Today (Decision Cash)
- Next 7–30 days (obligations and timing risk)
- Next 13 weeks (radar, not prophecy)
A rolling 13‑week cash forecast is widely used because it’s long enough to see the next set of cliffs, and short enough to be updated weekly without becoming fiction.
Cash control is an operating system (not a spreadsheet)
When cash is “managed in Excel,” the actual operating system is:
- people texting,
- inbox approvals,
- tribal knowledge,
- and whatever the bank says at 8am.
If you want cash to behave, you need three layers:
- System of Record: bank activity + subledgers (AP/AR)
- System of Context: classifications, commitments, owners, timing assumptions
- Orchestration: rules + reviews + decisions + follow‑through
Call it a “control plane” if you want. The point is: the number must be governed.
The two instruments that stop surprises
Instrument A: Cash Conversion Cycle (CCC)
CCC describes how long cash stays trapped in operations:
CCC = DIO + DSO − DPO
This is not “a KPI for finance.” It’s an executive map of where oxygen gets stuck:
- DIO: cash parked in inventory
- DSO: cash stuck in receivables
- DPO: how long you keep cash before paying
Instrument B: The weekly cash forecast
The cash forecast isn’t there to be “accurate.” It’s there to be honest:
- what you know,
- what you don’t,
- and what would break you if you’re wrong.
A “Cash View” that executives can actually use
A good cash screen is not 40 rows. It’s a handful of cards that answer the next question.
Suggested cards (minimal viable):
- Decision Cash (headline)
- Runway (in months, based on trailing burn logic you define)
- Next 7 days: obligations
- Next 30 days: obligations
- Week‑13 ending cash (base case)
- Cash movement this week (what changed and why)
- Cash truth status (how trustworthy the data is)
If you can’t show “truth status,” you’ll end up debating the number instead of using it.
Meeting cadence: keep oxygen flowing
Cash is not managed by a dashboard. It’s managed by a rhythm:
- Weekly (30–45 min): cash steering (what changed, what’s coming, what decisions need to be made)
- Monthly (60–90 min): working capital levers (DSO/DIO/DPO, policy + process)
- Quarterly: reset assumptions, thresholds, and ownership
The test: can your cash number survive a bad week?
Ask three questions:
- If revenue slips by two weeks, what changes first?
- If collections delay by ten days, do we know the exact exposure?
- Which outflows are truly discretionary—and who has the authority to pause them?
If you can answer those without a scramble, cash is a control system. If you can’t, cash is a rumor wearing a spreadsheet.