What is cash cover?

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 figure, and anyone who gives you one without asking about your business is guessing. What decides it is how predictable your income is and how concentrated it is. A business paid monthly by forty customers can run thinner than one paid in stages by three, because the second one loses a quarter of its income when a single client goes quiet. Seasonality pushes the number up for the same reason: the cover you need is the cover that carries you through your worst stretch, not your average one. Under four weeks, almost any business is one late payment from a problem.

How CFO Pal tracks cash cover

CFO Pal works your cash cover out on every sync and raises it unprompted when it falls to three months or less, without waiting to be asked and without you setting anything. That trigger is fixed, and it is deliberately separate from the cash minimum you can state in Settings: a minimum is a question about your balance, cover is a question about how long that balance lasts, and a business can be comfortably above one while running out of the other.

The figure it divides by is the part most calculations get wrong. CFO Pal averages your last four complete months, and leaves out the month you are currently in. A month that is three days old holds three days of costs, so including it makes your cover look two or three times better than it is on the 3rd and normal again by the 30th. The same rule governs every average the product states, so the cover on your dashboard and the cover in your Monday email are the same number.