How should you plan your cash management?

Sarah Lerche / November, 2017


Sarah Lerche, President, CFO Services at Escalon explains the importance of setting up a cash flow model to keep track of your cash and spending.

Video Transcript

How should you plan your cash management?

I think this is the hardest part for any entrepreneur and startup until you’re really big and cash flow is not an issue. It’s always about the cash. This is where having a good routine around and having your financials up-to-date is kind of the first step. After that which is equally important is to have a cash flow model where you know the ins and outs of your spending and knowing when you’re going to run out of money.

Whatever you forecast, unless you’re really good at it, people tend to be a little optimistic, and you run out quicker. It will also give you an idea of what you’re fundraising timeline is. At the same time, you have to start building a model about how much funds you need and how you’re going to use them over the next couple of years. This is where I think working with a finance team that has done this before, put together models and help keep an eye on the cash and the spend. It becomes a lifeline of the company, because if you don’t have any money you’re doomed, and it becomes really challenging. You might think who cares about my financials.

You might say “I know in my head, we’re only two people, how hard can it be.” You’ll be surprised by the things you’ve forgotten. Like legal bills, you haven’t gotten any for three months, and suddenly one shows up and you have $50,000 to pay that you haven’t planned on. It’s about working with a team to catch those things and make sure that you know you have liabilities coming in. Plus, asking the right questions. Have you thought of this? Have you thought of that? Is that in your cash flow planning?

It is to help avoid surprises and make sure you know as a founder when to go out and how to position how much money and how you’re going to spend it. It also builds in some credibility that you have a good financial discipline to future investors because in the end, they want to make sure you’re not only building something fabulous as a product but that you also know how to manage your financial situation.



  • Sarah Lerche, Escalon
  • November, 2017
  • 2:28
  • Finance & Operations, Finance

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