Opinion piece by Miguel Ángel Lacoma: Cash flow days = available cash ÷ (fixed monthly payments ÷ 30)
There is a question that almost no business owner in Bajo Cinca can answer with a number: if sales stopped tomorrow, how many days could your company survive?
Not how long you could endure it. Your company.
It's this month's awkward question, precisely because it's not something you can guess: it's something you have to calculate. Very few people do it. And that's why most companies don't know if they have three months' worth of cash flow or three weeks' worth.
Let's start by clearing up a common misconception, because a lot of people fall into this trap. Having money in the bank isn't the same as having cash on hand. And making money isn't the same as having cash on hand. Both things can happen simultaneously: a company can have a profit on its income statement but not a single euro to pay its employees on the 30th. It's not a contradiction. It's just that one is measured over time, and the other is measured in the moment.
Your accountant will tell you the books are in order. Your bank will tell you the balance. Neither of them will tell you how many days you can hold out. That calculation needs to be done strategically, not based on the bank statement.
And it's simple. That's why it hurts.
See how much money you really have available: bank and cash, minus overdrafts and minus payments you have already committed to.
Add up what comes out each month just because the company exists: payroll, rent, insurance, loan payments, utilities, taxes.
Divide.
Cash days = available cash ÷ (monthly fixed payments ÷ 30)
A rounded example. A company that bills €30.000 a month and has €25.000 in fixed payments: that's €833 a day. If it has €20.000 in the bank, it will last 24 days. Less than a month. And if its clients pay on 60-day terms, that month will never arrive.
And beware of a very common temptation: counting your unused line of credit as available cash. That's not cash, it's debt waiting to be used. If you need to draw on the loan to reach 30 days, your cash reserves aren't 30 days: they're the days you have without it.
As a reference point: below 30 days, any delay from a customer puts you in a difficult position. Above 90 days, you have room to negotiate, to invest, and to not depend on anyone paying you on time.
Now for the catch. The problem isn't the struggling company; it already knows that. The problem is the successful one: the one that has grown, bought more stock, or made an investment, and suddenly discovers that the 30th won't arrive. It hasn't lost a single customer. It has simply discovered, too late, that it had never measured how much air it had left.
In the Bajo Cinca region, there's an added complication: the seasonal nature of the harvest. Those who make their living from fruit or agriculture don't get paid in a straight line; they get paid in fits and starts. A year with a good harvest can turn into a year of financial hardship if payments come in November and payments are due in September. That's not fixed by selling more. It's fixed by knowing exactly when each euro comes in and when it goes out.
So this month's task is short: twenty minutes.
Calculate your cash flow days with your actual numbers, not the ones you'd like to have. Write down three figures: your real available cash, your fixed monthly payments, and the number of days you can last. And then ask yourself the question that really matters: does that number let you sleep at night?
If it works out, congratulations. You have something very few business owners have: a measured, not assumed, financial cushion. If it doesn't, you know where to look first. And if you don't know how to calculate it, that's precisely the problem.
September is a good month for this. The company gets back into its real rhythm, and you start to see who can weather the winter. Based on numbers, of course, not good intentions. Better to know now than to find out on the 30th.
Opinion piece. The opinions expressed in this text are the sole responsibility of its author and do not necessarily reflect the editorial line of this publication.
