Knowledge base
Before you run out of cash: 7 KPIs that will warn you of a crisis
Do you look at rising revenue and assume your company's finances are in good shape? This is one of the most common mistakes we see our clients make before they come to us with liquidity problems. Your profit and loss statement might show that the company is profitable, yet you still lack the cash to cover payroll, taxes, or supplier invoices. The culprit is often financial indicators that weren't being tracked - indicators that signal a crisis long before a bank denies your loan or a contractor halts your supplies. Find out which 7 financial KPIs you should monitor monthly and how to interpret them, even if you're not a finance expert.
Financial KPIs (Key Performance Indicators) are a set of numerical metrics that provide a snapshot of a company's financial health, covering liquidity, cash burn rate, and the ability to meet obligations. Unlike a standard profit and loss statement, which only shows profitability "on paper," effective financial KPIs bridge the gap between accounting data and actual cash flow.
This distinction is crucial because a company can be profitable while simultaneously being on the verge of bankruptcy due to a lack of liquidity. A classic scenario in e-commerce and SaaS looks like this: sales are growing and invoices are issued on time, yet the company cannot pay for warehouse space, servers, or salaries because customers pay late while obligations must be met immediately. It is this gap between "profit" and "cash" that most often leads to crises that could have been avoided if someone had looked at the right numbers sooner.
You don't need to be a financial expert or hire an analyst to assess your company's financial health. It is enough to spend fifteen minutes once a month calculating a few metrics based on data you already have - from your bank account, accounting system, and balance sheet. The most important thing is to do this regularly and compare results over time, rather than looking at a single snapshot. The trend is more important than any single number, as a month-over-month decline in liquidity serves as a warning long before a problem becomes irreversible.
Below, you will find 7 metrics that we at Besides Finance most often recommend to our clients in the IT, SaaS, and e-commerce sectors as an initial early-warning system for cash flow crises.
If you would prefer someone else to look at these numbers for you every month and explain what they mean, that is the role of a fractional CFO - you don't need a full-time hire to have someone monitoring your company's liquidity.
This is the question we start every conversation about financial health with startups and scaling companies. Cash runway indicates how many months a company can operate at its current rate of cash burn before the account hits zero.
If your runway is consistently shrinking and there is no new funding or clear revenue growth on the horizon, it is a major red flag that you need to act before decisions are made in a panic. As part of budgeting and cash flow forecasting we regularly calculate runway for our clients for the coming months so that such decisions are made in advance, rather than under the pressure of an empty bank account.
Burn rate is the rate at which a company spends cash over a given period. It is calculated on a net basis (i.e., expenses minus income) because it represents the actual outflow of money from your account, not your accounting profit or loss.
A rising burn rate alongside rising sales is a trap that is easy to fall into during rapid scaling - it means the company is hiring and investing in marketing and infrastructure faster than new customers can fund it.
The current ratio shows whether a company has enough current assets (cash, receivables, inventory) to cover liabilities that are due within the next year.
A result below 1.0 means that even liquidating everything the company has "on hand" would not be enough to cover current liabilities. This is one of the first indicators a bank looks at when assessing creditworthiness.
Quick ratio (acid test) is a more rigorous version of the previous indicator - it excludes inventory because it cannot always be quickly converted into cash. For SaaS companies that do not hold inventory, the result will be similar to the current ratio. For e-commerce businesses with large warehouses, the difference can be significant and reveals a lot about actual liquidity.
A large discrepancy between the current ratio and the quick ratio is a sign that the company's liquidity relies heavily on goods sitting in the warehouse rather than on actual cash or receivables that can be collected quickly.
Days Sales Outstanding (DSO) shows how many days on average it takes from issuing an invoice to receiving payment in the account. The higher the DSO, the longer the company is financing its customers out of its own pocket.
A rising DSO is often an early indicator of your clients' problems before they become visible elsewhere, while simultaneously directly impairing your own liquidity, as money that is formally "earned" does not physically reach your account.
Days Payable Outstanding (DPO) is the mirror image of DSO. It shows how many days on average a company takes to pay its suppliers. It is neither good nor bad in itself - the key is to compare it with DSO.
If your clients pay you in 60 days on average, but you have to pay your suppliers in 14 days, a cash gap is created that you must finance from your own reserves, a revolving credit line, or factoring. The larger this gap, the faster growing orders can generate a liquidity crisis instead of profit.
Operating margin shows what percentage of revenue remains in the company after covering all operating costs - before accounting for financing, taxes, and depreciation. It is the indicator that most quickly exposes growth "at any cost."
A shrinking operating margin alongside rising sales is one of the most misleading signals. From the outside, a company may look like it is growing, but in reality, every additional dollar of revenue generates less and less actual profit to boost your cash balance.
The ranges above are for guidance only and may vary depending on the industry, business model, and stage of company development - it is worth discussing them with an accountant or financial advisor who understands the specifics of your business.
If you run a SaaS business, in addition to these 7 metrics, it is worth keeping an eye on unit economics - CAC, LTV, MRR, and churn. They don't warn of an overnight crisis like runway or liquidity, but they do show whether your business model is actually scaling profitably in the long run.
A company's financial metrics aren't everything. It is worth comparing them with the signals that appear in the day-to-day operation of the business:
A single one of these signals does not necessarily mean a crisis. Several at once, persisting for several months in a row, are a clear sign that one of the financial metrics above requires urgent analysis.
A reasonable minimum is a monthly review - ideally right after the books are closed for the month, when the data is complete. However, it is worth tracking cash runway and burn rate more frequently, even weekly, if the company is in an early stage, scaling expenses rapidly, or approaching a new funding round. The key is not to calculate metrics "every now and then," but to build a simple, repeatable habit - preferably in the form of a single dashboard you check regularly, rather than manually searching for data across multiple systems each time. We BI dashboards build for our clients in Power BI—the data updates automatically, so there is no need to manually re-enter anything.
How do financial KPIs differ from a standard sales report? A sales report shows how much the company has invoiced. Financial KPIs go a step further by combining this data with actual cash flow, liabilities, and liquidity, showing whether the company actually has the funds to operate, rather than just whether it is profitable on paper.
Does rising revenue mean the company is not at risk of a liquidity crisis? No. This is one of the most common misconceptions. A company can record record-breaking sales while simultaneously losing liquidity if customers pay with significant delays, margins shrink, or operating costs rise faster than cash inflows.
Which metric should I start with if I have never calculated financial KPIs before? The simplest and most practical starting point is the cash runway- all you need is your account balance and average monthly expenses to get an initial, reliable picture of your situation.
How can I assess my company's financial health if I operate in an industry without established benchmarks? In such a situation, the trend is more important than a single metric value. Regularly comparing your own results with previous months allows you to spot a deterioration in the situation, even without external points of reference.
Do I need a special system to calculate these KPIs? Not necessarily. To start, a spreadsheet fed with data from your bank account and accounting system is enough. As you scale, however, it is worth considering an automated report or financial controlling to eliminate manual work and the risk of error.
Can my accountant help me calculate and interpret these metrics? Yes—this is a natural extension of standard accounting services. Well-managed accounting, supplemented by controlling and reporting, should provide these financial KPIs on an ongoing basis, rather than just the statutory reports required by law.
Are these KPIs enough to prepare a report for investors? They are a good starting point, but VC funds usually expect more—a comparison of results against the budget, management commentary on variances, and a full picture of unit economics. We prepare such an investor dashboard for our clients as part of our financial controlling service.
Running a business means constantly making decisions based on incomplete information, but your financial health doesn't have to be one of them. Instead of waiting until a cash shortage becomes an impossible problem to ignore, just spend fifteen minutes once a month calculating these 7 indicators and tracking their trends over time. It’s the cheapest insurance policy a growing company can buy.
If you don't have the time or resources to calculate and interpret these numbers yourself every month, check out our service: Fractional CFO. You don't need to hire a full-time CFO—instead, you meet regularly with our team, who will explain the numbers, flag liquidity risks, and advise on pricing strategy, all while providing clear dashboards instead of dry Excel spreadsheets.
Besides Finance is accounting for SaaS and e-commerce, designed to understand the specific needs of tech companies and online retail. Contact us or book a free consultationso we can take a look at your company's current financial health together.
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