Your Spread / Getting Paid Faster
The Spread
Cash + AR − AP. The health number.
A simple way to measure financial health. Accrual profit can look fine while cash dies. Bankruptcy is running out of cash.
Accounting
01
Cash
Bank plus checks ready to deposit. Life.
02
Receivables
Completed, uncontested work owed. Predicts cash in.
03
Payables
Bills and payroll taxes due. Predicts cash out.
04
Change
If it dropped an unusual amount, bring the why now.
How to use it
- At least monthly. Twice in change or crisis.
- Sit it next to backlog in crew-weeks.
- Goal: zero receivables. A dollar today beats a dollar tomorrow.