Money Mondays — Issue #1
Profit vs. Cash: the 30-second payroll test
One tip • One number • One action
Tip (≤60s)
Paper profit doesn’t pay Friday’s payroll. If your P&L says “up” but your balance feels tight, the problem is timing—cash-in vs. cash-out—not necessarily your margin.
Number to watch — Days Cash on Hand (DCOH)
- ✓ Formula: Cash ÷ (Average Operating Spend per Day)
- ✓ Target: 30+ days (early-stage: 21+)
- ✓ Find it fast: Last 3 months’ operating spend (exclude owner draws, debt principal) ÷ 90 → avg/day
Action — Payroll Buffer 1.25× (do it today)
- 1 Create a separate payroll account.
- 2 Before next run, transfer 1.25× the upcoming payroll amount.
- 3 After payroll clears, top it back to 1.25× weekly.
Result: You de-risk timing shocks without changing margin.
Mini Walkthrough (2 min):
If payroll is $40,000 → buffer = $50,000. Have $34,000 today? Transfer $16,000 now; finish top-up over the next 2 weeks. Pair with collections cadence: move large invoices to 50% upfront / 50% net-15 to replenish faster.
Pro move: Ask 3 key vendors for net-15 (or align to your collection cycle). One client freed $38k in 10 days doing only this.