Cash & Runway Series · Post 3
The Runway Hiding in Your Unpaid Invoices
Getting paid faster is the quickest way to extend your runway — and the only one that costs you nothing. Here's the math and the playbook.
The collections math
DSO 68 days → 40 days = ~$147,000 in the bank
At $160,000 billed a month, every day of DSO you cut ≈ one day of billings, kept
The excuse
Why almost nobody does it
Two reasons. It feels like admin rather than strategy. And chasing invoices feels rude.
On the second one: in our experience, companies that get paid in 40 days aren't less popular than companies that get paid in 68. They're just better organized.
The playbook
What to do, best first
Ask for a deposit. 25–50% upfront on new contracts changes the cash shape of every deal you sign from here on.
Put net-15 on the contract instead of net-30. Most small and mid-sized customers simply pay what the invoice says. If you sell to large companies, hospitals, or government, don't bother — their payment terms are set by someone in procurement who has never heard of you. Use deposits and milestone billing there instead.
Send the invoice the day the work is done. A surprising amount of your DSO is your own paperwork, not your customer's slowness.
Set up automatic reminders, then add a human. Three days before it's due, the day after, a week after. Then an actual phone call around day 35.
Let people pay by card or bank transfer. Removing “how do I even pay this?” beats sending another reminder email.
Decide your stop-work line in advance. Say 60 days late. Applying it to everybody is what keeps it from feeling personal. One thing to check first: does your contract actually let you stop work when someone doesn't pay? If it doesn't, stopping is a breach of contract. Add the clause to new contracts before you start enforcing it on old ones.
The gauge
What to watch
Check your DSO once a month. Then open the aging report — the one that splits your unpaid invoices into current, 1–30 days late, 31–60, and 60+.
Watch that last bucket as a share of the total. When it starts growing, you have a collections problem. One good sales month will hide it without fixing it.