You’ve been there, right?
Big night out with the buddies.
One too many sodas.
Your alarm goes off. It’s 6am. Time to get ready for work.
Fun fact: your roommates used all the hot water.
So it’s a cold shower for you.
Turn the handle. Take a breath. Step in…
and WOW. You’re awake.
That’s what this template does.
Here’s the Template
Grab it here so you can follow along.
Instructions
1. Cash in Bank Right Now
- Open your bank website
- How much cash is sitting in there right now?
- Enter that number in cell C6
2. Add: 100% Certain AR
If you know for sure (like 100%) you’re going to collect on some AR, then enter that in cell C7.
Want to be even more conservative? Make it $0.
3. Subtract: Known Payables
Subtract out any known payables that are due shortly or spoken for: vendor payments, estimated tax payments, etc.
These go in cell C8.
The Net Result?
The sum of the numbers above gives us a conservative snapshot of “net cash left today”
(cell C10).
Link your Expenses
You have a monthly financial model, yes?
Take your total monthly expenses and link them through column E.
Forget Revenue. Expenses only.
(Note: if you’ve built a Three Statement Model, link your “Change in Cash” instead, but be sure to strip out any Revenue flowing through AR)
Column H Keeps it Real
Time to get real.
Column H calculates how many months of runway you have right now, expenses only, assuming you never generate another dollar of revenue or raise capital.
This can sting. I know. This is your cold shower.
It can also be extremely helpful (if you let it).
How months of “Doomsday Runway” do you need to sleep at night?
See if you can maintain that number.
From there, everything else is upside.
That’s it for today. See you next time.
— Chris
~~~
📕 p.s. VLOOKUP or XLOOKUP?
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