Reading your cash position like a finance officer

Most business owners can tell you their bank balance. Far fewer can tell you their cash position — and the two are not the same thing. A healthy balance today can sit on top of a month where almost nothing new is coming in. A thin balance can sit on top of a strong, predictable pipeline.

A finance officer reads a handful of numbers to tell the difference. None of them is complicated. You just have to look at them together.

Collected vs expected

Start with two numbers for the current month: what you have actually collected, and what you still expect to collect from invoices already issued. Collected is real money in hand. Expected is money you have a claim on but haven't received.

The ratio between them tells you what kind of month you're in. Heavy on collected, light on expected? You had a strong month but the pipeline is thinning — time to issue more invoices. Light on collected, heavy on expected? The work is done; the chasing isn't.

Aging buckets

Take everything customers owe you and sort it by how overdue it is — not paid yet, 1–30 days late, 31–60, 60-plus. This is the single most honest picture of your receivables.

• Money in the 'not yet due' bucket is healthy — it is simply pipeline.
• Money sliding into 1–30 days needs a gentle reminder.
• Money in 60-plus is a warning. The longer a debt ages, the less likely it is ever collected. That is not pessimism; it is arithmetic from thousands of businesses.

An invoice is not revenue until it is collected. Aging buckets are how you watch revenue turn back into a wish.

Days Sales Outstanding (DSO)

DSO is the average number of days it takes you to get paid after issuing an invoice. If your DSO is 12, you typically wait a week and a half for your money. If it is 45, you are effectively lending every customer six weeks of free credit.

The number itself matters less than its direction. A DSO that creeps up month over month means collection is slipping — usually before it shows up anywhere else. A falling DSO means your follow-up is working.

Collection rate

Of everything you billed in a period, what share did you actually collect? A business collecting 95% of what it bills is healthy. One collecting 70% is doing a lot of work for money it will never see — and the gap is almost always fixable with earlier, more consistent reminders.

Reading them together

No single number tells the story. A great collection rate with a rising DSO means you get paid eventually, but slowly — a working-capital problem. A low expected figure with a healthy balance means you are coasting on last month — a sales problem. The skill is holding all of them in view at once.

That is exactly what a dashboard is for. Rekava puts collected, expected, aging, DSO and collection rate on one screen so you can read your cash position the way a finance officer would — in about thirty seconds, every morning.