CFOs: What Should You Track on Your Cash Flow Dashboards?

Clémentine d'Arjuzon

Jun 8, 2022

Summary

Cash Outflows. Net Operating Cash Flow. Accounts Receivable. Accounts Payable.Burn Rate. Cash Runway.Cash Flow Dashboard Example.How to Best Track Your KPIs on Your Financial Dashboard.

If your company was alive, its cash flow would be its blood. Without cash flow, you have no business. That’s why you need to check on your company’s health, ie, it’s cash flow regularly. And what’s where cash flow dashboards come in

Just like a heartbeat monitor, your cash flow dashboard allows you to track the important metrics for your business

On paper, it is straightforward: you follow the KPIs you are interested in. In reality, it is more difficult and comes with a set of questions: 

  • Which metrics should you track? 

  • What does a good financial dashboard look like? 

  • What’s the best way to visualize, track and report your KPIs? 

You’ll find the answers to these, with examples, in the article below! 

Want to skip ahead? Upflow has a built-in cash inflow feature to help you plan your cash for the next 6 months. 

ask a demo for the cash forecast

Let’s start with the cash flow metrics that should figure on your dashboard: 

Cash Balance.


What is Cash Balance and Why Does it Matter?


Your cash balance is the cash you have available at the moment. Admittedly, it is the single most important financial metric on your dashboard.

Checking the company’s cash balance is one of the daily tasks of any financial controller. With this information, you can know accurately what can be paid, invested, used to repay debt, etc. 

Your cash balance is the pulse of your company. By having a look at it, you can gauge how well it is performing and take the necessary actions to not only survive but thrive. 


How Do You Calculate Your Cash Balance? 

The formula to get your cash balance is rather easy. You get it by adding your current cash to the previous opening cash balance. 

Even if your cash balance in a month is negative, it’s best to keep your overall cash balance positive. Cash forecasting can help buffer by planning for such eventuality. 


Cash Inflows.


What are Cash Inflows?

Your cash inflows are the amounts of cash that come into your business bank accounts over a period of time

It encompasses cash from different activities:

  • Operating: your paid invoices, i.e. the goods and/or services cashed in this month (that amount would be on your sales dashboard, too!)

  • Financing: your interests on loans extended.

  • Investing: your ROI and dividends.

On your cash flow dashboard, we recommend you get both a total cash inflow and a cash inflow for each of the above categories. That’ll allow you to closely monitor each part of your business and understand where your cash is coming from exactly. Always handy! 


How to Calculate Your Cash Inflow? 

To get your total cash inflow over a month, you simply need to add your various revenue streams together. That’s it! 

Now, as financial professionals, we like to go a step beyond and know what your cash will look like tomorrow, next month, and beyond. On Upflow, you can automatically get a cash inflow forecast for the next 6 months of your business, based on your previous collections. 

Want to try it out? Have a look at our free analytics tool.

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Cash Outflows. 


What are Cash Outflows?

Your cash outflows are the opposite of your cash inflows: it’s all the cash that goes out each month

Once more, you can split your expenses into 3 categories:

  • Operating: paid invoices, inventories, and services purchased.

  • Financing: interests on loans and debt repayment.

  • Investing: any investment made during the period like buying equipment or dividends given.

These appear on your cash flow statement which, unlike your income statement, shows your working capital. 


How to Calculate Your Cash Outflows?

If you want to calculate your cash outflows, you just have to add them together. A simple summing in theory, but we all know that it can get difficult to track all outgoings through your company. That’s why you have a financial department in the first place, after all! 

That’s why the best way to calculate your cash outflows is by using accounting software (or the accounting feature of your bank account). It automatically tracks all your expenditures across your company. Most modern ones include features that not only allow you to keep your receipts, but also help with reconciliation. 


Net Operating Cash Flow. 


What is Your Net Operating Cash Flow? 

To get to your Net Operating Cash Flow (or net OCF), let’s first have a look at your operating cash flow. 

Your OCF is your cash balance for the operating part of your business. Concretely, it is all the activities normally run by your company like selling, paying salaries, purchasing inventory, etc. It figures in the first part of your cash flow statement. 

It’s a great metric to see if your cash flow generation is sufficient to run your business. Because it focuses on your business operations only, it gives you an accurate picture of where you are standing, well, business-wise. 

If you want to know if your company is successful at what it does: look at your operating cash flow. It tells you how well you are performing and as such, is an indicator of stability - or not. 


How to Calculate Your Net Operating Cash Flow? 

Your operating cash flow is based on your cash inflows and outflows. Under GAAP, you have two ways to calculate it: direct and indirect methods. 

The direct method is cash-based. You simply calculate your cash inflows and outflows over the time period. You add in your revenues and take off your expenses. Easy. 

The indirect method is cash-based too but reverted back from accrual accounting. Because accrual accounting is easier to use for big or growing businesses, it is often used. But it is not accurate when it comes to depicting your available cash, as records when transactions are registered and not when the cash changes hands.

To get to your operating cash flow, you, therefore, need to get all the accounting “fluff” out of your financial statements.

Taking your Net Income as a basis, add back your non-cash accounts (like depreciation). Consider also your changes in non-working capital accounts (like your accounts receivable)

Operating Cash Flow = Operating Income + Depreciation – Taxes + Change in Working Capital. 

That’ll give you your gross operating cash flow. To get to your net operating cash flow, you then need to subtract your loan interests and taxes from your total. 

We recommend tracking your net OCF as it gives you a better representation of the cash available. Taxes and loan interests need to be paid anyway, so it’s money you only temporarily have. 


Accounts Receivable. 


Why are Accounts Receivable Important for your Cash Flow? 

Your accounts receivable are the invoices yet to be paid by your clients. The ones you have issued but for which payment hasn’t been collected. 

It’s good to keep in mind that your A/R is basically a loan you extend to your clients. It’s money they haven’t paid yet for a product/service they have benefited from. As such, it heavily influences your cash flow.

Since the money hasn’t landed on your bank account yet, it is considered a liability on your balance sheet. Your clients could raise a dispute over their invoices, or simply never pay you. 

Of course, there are many ways you can prevent bad debt from happening - one of them is to encourage your clients to sign up to a subscription with their credit card. 

If you don’t cash in enough of your accounts receivable, it could jeopardize your liquidity. This is why you need to pay attention to several A/R metrics.  Having an AR dashboard is crucial for your growth. 


How to Track Your Accounts Receivable?

Tracking your A/R means tracking your invoices and making sure they’re paid. On-time. 

To do so, you can use spreadsheets (which we don’t recommend), or you can use specialized A/R software (like us!). Your billing or accounting software might offer a dashboard feature, too, with some A/R features. 

What’s important is to have both:

  • An overview of your unpaid invoices: the total amount of your A/R.

  • The details of your A/R breakdown with each invoice, amount, due date, and client contact. 

The former should figure on your cash flow dashboard, while the latter will help you to take action to actually collect your payments. 

Besides the total amount pending, you also want to look at a couple of more A/R metrics: 

  • Your Days Sales Outstanding (DSO): it is the number of days your clients take to pay you, on average. 

This number should be as close to your payment terms as possible (0 days if you require payment upon receipt, 30 days if you have a one-month due date, etc.)


Along with your cash flow, it is a great indicator of your liquidity and should therefore be kept quite low. If it’s higher than you’d like, there is a way to improve both your DSO and your Cash Flow.

  • Your Aging Report: it is a visual representation of your unpaid invoices in different categories: 0 to 30 days overdue, 30 to 60 days, etc. At a glance, you get an idea of which invoices should be made a priority

These are just two AR metrics. There are more KPIs your fast-growing company should track to optimize cash collection

Need help tracking these A/R metrics? Have a look at our free spreadsheet.

cta free spreadsheet

Accounts Payable.


What Are Accounts Payables?

Your Accounts Payable (AP) are essentially the opposite of your Accounts Receivable. They are the money you owe to your providers for services/products they have delivered.

When you receive an invoice and process it but don’t pay it straight away, it becomes an AP. Instead of paying cash, you are being extended a credit by the vendor company. 

So they’re not cash outflows yet but will be in the future. It’s crucial to monitor them to make sure you have the necessary liquidity to pay them on time. 

What you track on cash flow dashboards is the total amount due

If you want to get more details to optimize your payable process, you can look at: 

  • Your Days Payable Outstanding: it’s the average number of days it takes you to pay your providers. It’s like your DSO but applied to your AP.

  • Your invoicing cycle: how long it takes for your finance team to process an invoice.

  • Your average cost per invoice: how much it costs to process an invoice.

It’s usually better to use software to process and track your payables, as it is both cheaper and more efficient. 


Why Pay Close Attention to Your Accounts Payable? 

Accounts payable are your short-time debts. And like every debt, it’s good to know exactly how much you owe, and when. Which is why it's unmissable on your cash flow dashboard. 

Because it is an indicator of expenses and future cash outflows, it is important to track your AP:

  • If you see them piling up, you know you’ll need some liquidity soon to pay them off.

  • If they are close to zero, your cash flow may benefit from paying your providers later. 

There is a balance to find between keeping your liquidity high while meeting your providers’ payment terms. Watch out for late payers fees, but also for early payment discounts! 


Burn Rate. 


What is Your Burn Rate and Why Does it Matter? 

Your burn rate is the speed at which you burn through your cash before you generate a positive cash flow. 

It’s especially used by new companies like startups, who rely on external funding (like VCs). It is important to know how fast you burn your cash, and how long you have before you run out of it. 


How Do You Calculate Your Burn Rate?

To calculate your cash burn rate, you need to know your current cash position and your monthly operating expenses. 

Gross Burn Rate = Cash / Monthly Operating Costs

If you are already bringing in money from your core activities, you can also calculate your net burn rate. This is more accurate as it factors in the cash from your operations. 

Net Burn Rate = Cash / Monthly Operating Losses


Cash Runway.


What is Cash Runway and Why Track it?

Your cash runway measures how long your company can remain solvent. It answers the question: how long do we have before you run out of cash? 

Startups use it and it is a metric investors want to see. Startups tend to have a faster burn rate and therefore a smaller cash runway.

Bigger and more established companies use it as a key performance indicator too, to report to boards and management alike. 

All in all, your cash runway is an indicator of your profitability. Tracking it means knowing where you stand and being able to course-correct in time. If it is shorter than you’d like, you can watch your spending. 


It’s important to factor in the seasonality of your business, too. If your company sells ice creams, it might have a short runway in winter. On the other hand, it will get longer in the summer months. 


Monitoring your cash runway means knowing what is normal for your company and what is not, so you can take the necessary actions. 



How to Calculate your Cash Runway? 

To calculate your cash runway, you need to first get your cash burn rate, i.e. the speed at which you go through your cash. 

Cash runway = Total Cash / Burn rate

That will give you the amount of time you have before you run out of cash. So if you have $2,000,000 on your bank accounts and spend $200,000 a month, your cash runway is 10 months 

Cash Flow Dashboard Example.

Let’s take an example of a cash flow dashboard. Super-Profitable Company (SPC) is in its 3rd year of business. 

Here are its (simplified) financial numbers for September: 

Opening cash balance: $1,300,000

Closing cash balance: $1,700,000


Sales: $800,000

Tax credits: $75,000


Salaries: $220,000

CoGS: $110,000

IT purchase: $30,000

Interests on loans: $25,000

Taxes: $90,000


Depreciation: $40,000

Accounts Payable: $80,000

Accounts Receivable: $250,000


Cash Flow Dashboard Template.

Now, let’s calculate some of the metrics that would appear on SPC’s financial dashboard. 

Cash Inflow: 

From Operating = $800,000

From Financing = $75,000

Total Cash Inflow for September = $875,000


Cash Outflow: 

From Operating = $420,000

From Financing = $25,000

From Investing = $30,000

 

Total Cash Outflow for September = $475,000


Cash Balance: 

The formula is: Cash Balance = Closing balance - Opening balance 

Opening Cash Balance: $1,300,000

Closing Cash Balance: $1,700,000

Change in cash Balance for September = $400,000.


Net Operating Cash Flow: 

The formula for Net Operating Cash Flow is: Operating Income + Depreciation – Taxes + Change in Working Capital (AP AR).


Net Operating Cash Flow = $800,000 operating income + $50,000 depreciation + $80,000 accounts payable - $300,000 accounts receivable - $90,000 taxes = $630,000.


Accounts Receivable and DSO:

The total of Accounts Receivable over September is $300,000. Let’s also calculate the Days Sales Outstanding. 

DSO = Accounts Receivable end of period / Gross Sales * number of days in period 


Here, DSO = $300,000 / $800,000 * 30 days = 11,25 days

It takes 11 days on average for Super Profitable Company to be paid. 

Note that for the sake of simplicity here, that’s done using the quick simple method - which isn’t the most accurate. It’s better to use the countback method. Here’s a step-by-step guide to calculating Days Sales Outstanding


Accounts Receivable and Days Payable Outstanding:

The total amount of Accounts Payable in September is $80,000. Let’s also look into SPC’s Day Payable Outstanding (DPO).

DPO = Accounts Payable * Number of days / CoGS

DPO = $80,000 * 30 / $110,000 = 21,8


That means it takes about 22 days for Super Profitable Company to pay its suppliers.


That’s a very simplified cash flow dashboard template! And it already takes a lot of time to manually track and compute these financial metrics by hand.


How to Best Track Your KPIs on Your Financial Dashboard.


Why Excel Isn’t Enough for Calculating KPIs.

While Excel is a part of every finance team’s toolbox, it falls short when it comes to calculating KPIs. 

  • It is error-prone. Putting data manually into a spreadsheet irremediably means typos and mistakes will be happening. 

Then comes the question of which data to choose? If you want accurate results, you need up-to-date numbers. Those are usually spread out in between your bank accounts, your billing software, your accounting software, your CRM… Getting the latest data quickly becomes a chase between different tools. 

  • It’s inefficient. Calculating your financial KPIs by hand takes a lot of time. Even with an Excel template, it requires a lot of tweaking to get the results you want. Double that time if you want to change a variable, run different scenarios, or compare time periods. 

The time you spend on manually chasing, calculating, and tracking is time you don’t spend on something else. Like actually improving your KPIs.  

Even if you have a finance team to work with, their energy would be best dedicated to tasks like setting up late payment reminders to collect your A/R. 

(Plus, let’s be honest: Microsoft doesn’t offer the best customer experience!)

So, if Excel dashboards aren’t accurate or efficient, what’s the alternative? 


KPI Dashboard Made Easy with Automation. 

What you want is automated software that does all the computing, tracking, synchronizing, and reporting for you. 

Financial software is designed for this purpose. Using one has multiple benefits: 

  • Effective tracking of your KPIs: you don’t have to compromise time for quality. If you use software like Upflow, you know that your DSO will be calculated in the most accurate way. You don’t have to even worry about it.  You can focus on checking your metrics regularly to course-correct your strategy. 

  • Accurate data in real-time: once your software is integrated with your account and billing apps, you know the data you get is in real-time. Your software becomes your one source of truth when it comes to your cash flow. 

You can easily access visualizations of your data and even create reports. Perfect for last-minute meetings!

  • Cash flow forecast: one of the key features of specialized software is prediction. You get forecasts based on your previous data, so you know what’s coming.

Our in-house tool for instance bases itself on your previous collection speed to predict your cash inflow for the next 6 months. 


Which Software to Use for Financial Dashboards?

You can choose to go with software that does only financial dashboards (like Biz Infograph). Or, you can choose one with advanced analytics that also allows you to improve your cash flow. 

When it comes to adding software to your company, there are a couple of things to pay attention to 

  • Integration: your new software must integrate within your existing finance stack. If not, you’ll have to transfer data manually which defeats the point of even automating your tasks. Make sure your software has a strong API and connects with third-party apps.

  • Features: when it comes to cash flow dashboards, what are your exact needs? Mapping them out will bring extra clarity. That’ll help define if you can meet your needs with an analytics feature of existing software, or if you need a dedicated tool to get more depth. 

  • Think long-term: tomorrow’s needs will be different from today’s. That’s why you should think ahead when it comes to your finance stack. Maybe you can cope with a reduced scope right now. But it might be time to prepare for the future today, while the urgency isn’t too strong. 

At Upflow, we also think the best software is the one that allows you not only to track your metrics but to optimize them too. 

This is why our A/R software offers analytics features like a cash forecast while allowing you to get paid faster. All in one place. 

cta cash forecast


Key Takeaways


  • Cash flow dashboards help you track your cash position and assist you in cash analysis. 


  • These are the 8 financials KPIs we suggest you get on your financial dashboard

    • Cash Balance, 

    • Cash Inflow, 

    • Cash Outflow, 

    • Net Operating Cash Flow,

    • Accounts Receivable (with DSO),

    • Accounts Payable (with DPO),

    • Burn Rate, 

    • Cash Runway. 

  • While tempting, using excel dashboards is time-consuming as well as inaccurate. 

  • To track, visualize and report your KPIs, it’s best to use automated software that plugs into your existing finance stack. 

  • Consider what your present and future needs are before picking software as switching costs are high. 

  • Upflow is an A/R automated software that gets you paid faster while offering in-depth analytics to help financial management. 

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