I want you to think about the last time you sent an invoice and then waited.

Waited for the approval cycle. Waited for the check run. Waited for the wire that was supposed to go out last Tuesday. Waited while your own bills kept coming due on schedule.

That gap between when you earned the money and when it actually arrives in your account is called accounts receivable. And for a lot of early stage companies it is a bigger threat to survival than burn rate ever was.

What accounts receivable actually is

Accounts receivable is money your customers owe you for work you have already delivered. You recognized the revenue. You did the work. You sent the invoice. The money just is not in your account yet.

On your balance sheet it shows up as a current asset — meaning it is theoretically liquid and collectible within the next 12 months. In practice it can be anything from a wire coming tomorrow to a disputed invoice that never gets paid.

The gap between those two outcomes is where startups quietly die.

The math that founders miss

Here is a scenario that plays out constantly.

A B2B SaaS company has $200,000 in monthly revenue. Net burn after revenue is $50,000 per month. Cash balance is $400,000. On paper that is 8 months of runway.

Except their average collection period is 60 days. They have $350,000 sitting in accounts receivable right now. Two customers representing $80,000 of that are 90 days past due and not responding to follow up.

Their real liquid cash position is $400,000. Their real operational runway is closer to 5 months. And if those two slow paying customers churn or dispute the invoices, it is less than that.

The burn rate did not change. The runway did.

The three AR problems that kill companies

Slow payment terms are the most common. Net 30 is standard. Net 60 is common in enterprise. Net 90 exists. Every extra day of payment terms is a day you are financing your customer's operations with your own cash. At scale this becomes a working capital crisis even for profitable companies.

Concentration risk is the quiet killer. If two customers represent 60 percent of your AR and one of them slows down payment, your cash position changes materially overnight. Most founders do not notice until it is already a problem.

Uncollectable invoices are the worst case. A customer that disputes an invoice, goes out of business, or simply stops responding turns your asset into an expense. That $80,000 sitting in AR at 90 days past due has a meaningful probability of never arriving.

What to actually track

Days Sales Outstanding is the metric that matters. It measures how long on average it takes you to collect payment after invoicing. The formula is simple: divide your accounts receivable balance by your average daily revenue.

A DSO of 30 means you are collecting roughly on net 30 terms. A DSO of 75 means something is wrong — either your terms are too loose, your collections process is broken, or you have customers who are struggling.

Track this number monthly. Watch the trend. A rising DSO is an early warning signal that your cash position is about to get worse even if your revenue looks fine.

The one thing to do this week

Pull your AR aging report. This is a standard report in any accounting software that shows you every outstanding invoice sorted by how long it has been outstanding. Look specifically at anything over 60 days.

If you have invoices over 90 days with no follow up plan, make a call this week. Not an email. A call. The ones that get paid are the ones that get asked for.

Your burn rate tells you how fast you are spending. Your AR tells you whether the money you think you have is actually coming. Both numbers matter. Most founders only watch one.

— Clark Lombardy The Unaudited

Tools and templates from The Unaudited → theunaudited.gumroad.com