What is cash cover?
Cash cover tells you how many weeks (or months) your current cash balance would last if no more money came in. It is the simplest and most honest measure of your financial resilience. If the answer is less than four weeks, you are one late payment away from a crisis.
How to calculate it
Cash cover = current cash balance divided by average weekly expenses. If you have £24,000 in the bank and your weekly outgoings average £4,000, you have 6 weeks of cash cover. That means if every customer stopped paying today, you could keep the lights on for six weeks.
What is a healthy cash cover?
There is no universal rule, but most financial advisors suggest a minimum of 8 to 12 weeks for small businesses. Seasonal businesses need more because their income fluctuates. Businesses with a small number of large clients need more because losing one client has an outsized impact. If your cash cover is under 4 weeks, you are operating on a knife edge.
How CFO Pal tracks cash cover
CFO Pal calculates your cash cover automatically every time your data syncs. It shows the number clearly on your dashboard and alerts you if it drops below the threshold you set. You always know how much runway you have.
Always know your runway
CFO Pal tracks your cash cover in real time and alerts you before it gets dangerously low.
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