Manage by cash and evidence

A business can report revenue, celebrate a contract, and still miss payroll. Manage the path from buyer evidence to collection, contribution, and cash— not the loudest number on the dashboard.

Suppose a client signs a ₹6 lakh contract in August, accepts delivery in September, and pays in November. Contracted value, recognized revenue, invoiced receivable, and cash collection occur at different moments. If the founder treats all four as money in the bank, October’s hiring decision may be made with imaginary cash.

Every weekly operating review should hold market, customer, delivery, and money together. A sale that cannot be delivered, collected, and retained is not a complete commercial result.

Keep a four-part dashboard

Market and pipeline

• • target accounts contacted with relevance;
• • discovery conversations held;
• • qualified opportunities by evidence stage;
• • proposals and decisions;
• • wins, competitive losses, no-decisions, and disqualifications with reasons.

Customer and delivery

• • time to first value;
• • agreed success measure versus observed result;
• • activation, repeat use, retention, or repeat purchase;
• • material failures, complaints, credits, or refunds;
• • founder intervention, rework, and delivery capacity.

Economics

• • price and revenue by customer or cohort;
• • direct cost to serve and gross contribution;
• • acquisition cash and people-hours by channel;
• • customer-acquisition payback based on gross contribution;
• • scope changes, discounts, and support obligations.

Cash and obligations

• • unrestricted cash actually available;
• • collections received and expected by named invoice/date;
• • receivables aging and disputed amounts;
• • payroll, suppliers, debt, rent, taxes, and statutory reserves;

• • committed purchases and annual renewals;
• • downside runway under delayed collections or lost sales.

Blank means unknown, not zero. A receivable is an asset on the balance sheet, but it cannot pay a supplier until collected. Deferred revenue may bring cash early, but it also represents work still owed. Profit and cash answer different questions; both matter.

Advance pipeline on evidence

Use the stage gates from the sales chapter and record three dates: stage entry, last buyer action, and next buyer action. A deal should not move because the seller sent something. It moves because the buyer did something that reduces uncertainty: confirmed impact, involved an approver, accepted a success criterion, completed review, or signed paper. Separate closed-lost from no-decision. Losing to another provider may indicate positioning, proof, or criteria. Losing to the status quo may indicate weak priority, excessive change risk, or a false close date. Treating both as “loss” hides the mechanism.

Track stage conversion only after definitions are stable. If one seller creates an “opportunity” after a reply and another after confirmed impact and authority, their conversion rates cannot be compared. Instrument discipline comes before performance judgment.

Use sales velocity as a diagnostic lens

Sales velocity = Qualified opportunities × Average deal value × Observed win rate ÷ Average sales-cycle length

Keep currency and time units consistent. Use a mature-enough sample and a written opportunity definition. The result is a planning lens, not a promise.

Worked illustration—not a forecast. Assume twelve consistently qualified opportunities, an average deal value of ₹3 lakh, an observed win rate of 25%, and an average sixty-day cycle:

(12 × ₹3,00,000 × 0.25) ÷ 60 days = ₹15,000 of expected closed value per day

The equation shows four levers: opportunity count, deal value, win rate, and cycle length. It does not tell you which lever is safe. Adding weak opportunities inflates the first input and corrupts the forecast. Raising price may reduce win rate. Shortening review may increase delivery or legal risk. Diagnose the constraint rather than worship the output.

Connect acquisition to contribution and cash

Use these relationships carefully:

CAC = (Attributable sales and marketing cash + attributable people cost) ÷ New

customers acquired

Gross contribution = Customer revenue − Direct cost to serve

CAC payback months = Per-customer CAC ÷ Monthly gross contribution per

acquired customer

Use parentheses in the first formula in working sheets: (sales and marketing cash + attributable people cost) ÷ new customers. The CAC numerator and contribution denominator must refer to the same acquired cohort and period basis. State whether revenue is booked, recognized, invoiced, or collected. State which service costs are included. Cohort retention matters: a payback estimate based on customers who leave before payback is not an estimate; it is wishful arithmetic.

Do not force a lifetime-value number from a young business with little retention history. Track observed cohort contribution and survival instead. Do not use a universal LTV:CAC or payback threshold as permission to scale. Cash runway, business model, gross margin, sales cycle, capital access, and uncertainty change what is tolerable.

Run a thirteen-week cash meeting

Each week, roll the forecast forward:

1. reconcile opening cash with bank evidence; 2. list collections by customer, invoice, probability, and date; 3. list payroll, suppliers, taxes, debt, rent, software, and committed outflows;

4. separate mandatory, committed, and discretionary payments; 5. protect a minimum cash floor appropriate to the business; 6. run a downside case for delays, refunds, lost deals, or delivery cost; 7. assign an owner and due date to every material gap.

Do not count a verbal commitment as a collection. Do not hide a disputed invoice inside the normal aging total. Contact slow payers early and professionally. Invoice when the contract permits, make acceptance explicit, and resolve documentation problems before the due date.

Warning signs deserve investigation, not instant conclusions: receivables rising faster than sales; revenue rising while operating cash weakens; discounts expanding while win rate does not; growing pipeline with fewer buyer actions; high acquisition with weak activation or retention; more revenue accompanied by more founder heroics; positive accounting profit with falling cash. Cash is concrete, but it is not manipulation- proof: timing payments, delaying investment, factoring receivables, or collecting advances can improve a period while moving obligations elsewhere. Read the full system.

· FS pp. 15–26 · TABLE pp. 22–29 · SALES pp. 5–7 and 33–34 · GE ch. 17. The sales-velocity example is labelled arithmetic; cash, profit, and free cash flow are useful but never described as manipulation-proof.