Before we dive in, a quick heads-up…

If your cash flow has been feeling tight, or honestly, if you’re just not quite sure where your cash is really going, you need to join my free lightning session this week on Maven:

​5 Cash Flow Killers Draining Your Bank (And How To Fix It)​

It's just 3 hours after this sends, so I sent the e;mail early to give you more time to sign up. The session is fast and practical and will change how you look at your bank balance.

And if you want to go even deeper, enrollment is open for my next live cohort, SMB Financial Fundamentals, where we cover the core financial systems every business owner needs to lead confidently, grow responsibly, and finally feel in control of their numbers. Enrollment closes TOMORROW, so act fast.

Here’s your invite to both:

​FREE Lighting Session: 5 Cash Flow Killers Draining Your Bank (And How To Fix It)​

​Cohort (with $100 off code EMAILCREW): SMB Financial Fundamentals​

Now, onto this week’s newsletter…

CASHOS + CAPITALOS: 6 REPEATABLE PROCESSES TO CREATE MATURE BUSINESS

read on smbfinanceos.com​

Most small business owners don’t need more financial advice. You’ve likely received and processed the advice, but somehow it never sticks.

Why you may ask?

It’s because you’ve not built the infrastructure to keep your financial needs top of mind.

Part of becoming a mature business is installing systems that guide your decisions each and every week, month, and quarter.

This article gives you exactly that for both Cash & Capital OS.

By the end, you’ll have a clear blueprint for how to operationalize both of your core financial engines:

• CashOS: The liquidity engine that keeps your business breathing.
• CapitalOS: The deployment engine that decides where excess cash goes.

These aren’t theories or one-time projects.

They’re the core operating systems that every financially mature business runs on, whether they realize it or not.

CASHOS: YOUR LIQUIDITY ENGINE

CashOS isn’t just about “knowing your numbers.”

It’s about having an active system that:

• Predicts cash shortfalls before they happen
• Moves cash into the right buckets automatically
• Keeps your finger on the pulse of short-term risks

The core systems of CashOS are:

1. Weekly Cash Forecasting & Reporting
2. Monthly Rules & Reserve System
3. Monthly KPI Monitoring

WEEKLY CASH FORECASTING & REPORTING

This comes in 2 forms:

1. A 13-week cash flow forecast
2. Weekly cash, AR, and AP reporting

With a cash flow to predict cash over the next 13 weeks and an understanding of cash balances today, you have almost your whole cash picture covered.

The weekly reporting can be combined into the 13-week cash flow, but I encourage businesses to have an email summary of the 13-week cash flow that doesn’t require digging all the way in to get the highlights.

This often looks as simple as three numbers:

1. Cash balance
2. Outstanding AR balance
3. Outstanding AP balance

Spread over 2-3 columns:

1. Current balance
2. Last period balance
3. Difference

Other items you could add:

1. AR over 60/90 days
2. Line of credit (LOC) balance & change

If you have much more, you’re likely making it too complicated.

To read more about the 13-week cash flow forecast (and get my template), go to this article.

MONTHLY RULES & RESERVE SYSTEM

This system answers two simple but critical questions:

1. How much cash do we really need to keep on hand?
2. What do we do with excess cash beyond that amount?

And “what do we do” doesn’t mean “how do we spend it?” but instead… how do we get it OUT of our operating account so we don’t spend it?

Most small businesses make these decisions by gut feel or by looking at their bank balance. That leads to feast-or-famine cycles, panicked decisions, and missed opportunities.

This system installs simple rules to replace those guesswork habits.

This can be done with two simple systems:

1. Establish Cash Reserve Targets
2. Create a monthly cash movement rule & ritual

CASH RESERVE TARGETS

When you think about your cash, it can be bucketed into a few buckets:

1. Operating Cash
2. Emergency Cash
3. Set-aside/Strategic Cash (for taxes or reinvestment)

The amount of operating and reserve cash you should keep was talked about in this article, where we broke down all the ins-and-outs.

Simply, you can use this “formula” to decide for yourself what you need.

Once you know what you need in your operating and reserve account, it’s time to get the rest of the cash out of your accounts to avoid overspending.

Ever felt the stress of taxes or been unable to pay them? Yeah, that’s because you didn’t have a system for set-aside.

THE MONTHLY CASH MOVEMENT RITUAL

Once your reserve targets are set, you’ll define simple, automatic rules for what to do with any excess cash.

Calling it a ritual is a bit goofy, but this should be a sacred part of what you do each month. Even if someone else moves the money, you (as the owner) should check on it.

Example rules:

• At the end of each month, if cash in the operating account exceeds $X, transfer the excess to the reserve account.
• If reserves fall below $X target, automatically top them up using extra operating cash before making other investments or distributions.
• Once reserves are fully funded, move any further excess cash into a “strategic” account for future investments, capital spending, or owner distributions.

The key here: No more wondering what to do with cash at the end of the month.

The rules decide for you.

MONTHLY KPI MONITORING

This system answers a critical question: How do we know whether our cash systems are actually working?

Most business owners only check their bank balance, and maybe revenue, at the end of the month. But those numbers alone don’t show the health of your cash flow.

Monthly KPI (Key Performance Indicator) Monitoring is how you spot hidden problems early and keep your business financially stable over time.

Each month, during your Financial Review process, you should measure the important cash metrics for your business. This will be different for different businesses, but some good ones include:

Here are the most important ones (explained simply):

1. Cash Conversion Cycle: this combines AR (Days Sales Outstanding or DSO), AP (Days Payable Outstanding or DPO), and Inventory (Days Inventory Outstanding or DIO). Monitor based on trends and compare to industry norms. Read more about it here.
2. Statement of Cash Flows: It’s so overlooked I had to include it. Look specifically at Operating Cash Flow (OCF) and Free Cash Flow.
3. Cash Runway or Days/Months Cash on Hand: How many months of expenses could you cover with the cash you have right now? A shrinking runway is an early warning sign that you may need to make cuts.
4. Current Ratio: this is the ratio of Current Assets to Current Liabilities and measures short-term liquidity. Quick Ratio excludes Inventory and gives a more realistic short-term number, as it’s often hard to liquidate inventory.
5. Steady State Cash Flow: this is the one we made up, and I’ll talk about it more below.
6. Tax Liability Accrual: how much have you accrued for taxes but not yet paid? Avoid tax surprises by tracking your liability outside your financials.

Pick one or two of these and start including it in your monthly reporting. You’ll choose based on what’s most important for your industry.

CAPITALOS: YOUR DEPLOYMENT ENGINE

CapitalOS exists to help you deploy your excess cash intentionally, not emotionally.

It’s how you shift from “Can we afford this?” to “Is this the best use of capital right now?” This helps us transition from reactive spend to intentional spending.

CapitalOS Has Three Core Systems:

1. Capital Planning & Prioritization Engine
2. Steady-State Cash Flow (SSCF) Monitoring
3. Debt Management System

CAPITAL PLANNING & PRIORITIZATION ENGINE

All capital planning and prioritization starts with your Capital Allocation Policy where we set high-level cash deployment priorities.

If you recall from our previous writing, we talked about understanding the areas you can deploy excess cash:

• Owner rewards
• Business reinvestment
• Balance sheet strengthening
• Outside investments

Once we’ve identified our combined personal and business priorities, it’s time to consider what business reinvestment is needed.

We need a plan that considers today’s needs, future needs, and the impact of all those needs.

There isn’t a perfect formula, but these two variables are key:

1. ​Understanding Growth CapEx vs Maintenance CapEx needs. Maintenance CapEx is the money you must spend to keep your business running (replacing broken equipment, worn-down assets, or outdated systems) and Growth CapEx is an intentional investment designed to increase revenue, improve capacity, or expand into new areas.
2. ​Creating a long-term capital plan. This is the forward-looking process where you map out all your expected capital needs over the next 18 to 24 months. This includes everything from CapEx projects to debt repayments, owner distributions, and potential acquisitions. The goal isn’t perfect precision, it’s early visibility, so you don’t get blindsided by overlapping capital needs.

Once you’ve thought through these concepts and ideas, and subsequently put together a plan, that plan should be revisited quarterly and annually.

Each quarter we want to review the planned upcoming purchases and ask: is everything still true today as it was when we made this assumption? If so, proceed with the purchase. If not, pause and reassess.

Annually, we want to revisit and redo the plan. A lot can change, and this should fall during your annual planning you do each year.

STEADY-STATE CASH FLOW (SSCF) MONITORING

We introduced this concept during the CapitalOS series and I’ve gotten good feedback on the concept. This is really a measure of true cash you have “on hand” to handle obligations and make your capital planning decisions on.

The idea is that the cash flow today plus expected future cash flows should be enough to maintain the business (and maintenance CapEx) but also reinvest and grow the business.

If not, you have to reassess your model.

With SSCF, we take into account Operating Cash Flow, Taxes, Debt, and maintenance CapEx.

I go indepth on it in this article, if you want to go deeper.

The goal is real, dependable cash after ALL obligations, just not those on your traditional Financial Statements.

This should help you better understand what a safe owner distribution level is, the level at which you can invest in the future, and ensure you don’t overextend your business.

DEBT MANAGEMENT SYSTEM

This system exists to help you answer the two most important questions about business debt:

1. Should we take on this debt?
2. Are we managing our current debt wisely?

Most business owners either avoid debt entirely without looking at the larger implications, which leads to unnecessary stress or risk.

The Debt Management System ensures that you use debt intentionally, confidently, and strategically, without letting it sneak up on you later.

We need to:

1. Centralize all business debts into a single place for easy visibility. A spreadsheet can do a great job of this. I have a template… reply and if we get enough interest I can share.
2. Create a simple review process before taking on new debt. This could be a one-sheeter stating debt strategy and expectations. It can be what ever you want, but a few good questions or things to consider are:
   1. Will this debt create more value than it costs?
   2. Can we comfortably afford the payments, even if the business has a slow quarter?
   3. What personal or emotional costs come with this debt?
3. Monitor debt performance over time. At least once or twice a year, sit down and look at balances and repayment schedules, those that could be refinanced, and whether you should pay down on the schedule or accelerated. This helps you catch risks before they become emergencies and intentionally manage the cost associated with debt.

We want to use debt as a strategic lever, not a survival tactic or accidental trap. Creating these monitoring systems help ensure that’s possible.

Remember, debt isn’t inherently good or bad.

Used wisely, it can be a powerful growth tool that helps you invest in equipment, expand your team, or smooth out cash flow bumps. But unmanaged debt quickly turns into a silent drain on your business that locks up cash, causing stress, and limiting your future options.

This system ensures you only take on debt for the right reasons and that every dollar you borrow stays aligned with your overall business strategy.

Read more about assessing debt here.

WRAPPING UP

The beauty of CashOS and CapitalOS together is that they work in concert and are designed to feed into one another.

CashOS protects liquidity. CapitalOS deploys surplus.

CashOS builds discipline and short-term safety. Done well, cash will build up and flow into CapitalOS, where it gets allocated intentionally.

The outputs from CapitalOS (debt, CapEx, distributions) then feed back into your cash flow forecast, SSCF, and debt system.

This creates a self-reinforcing flywheel of calm, confident decision-making.

Most small businesses run on hope and hustle.

These systems let you run on discipline and design.

If you install these systems, you’ll spend less time worrying about money and more time leading, growing, and enjoying your business.

Take a few minutes this week and consider what you can implement quickly to get a win, then create a plan for implementing the rest as you go.

Block 30 minutes this week:

1. Pick one system from CashOS and one from CapitalOS.
2. Write down one simple action you’ll take to move toward implementation.
3. Commit to installing one system in full over the next 30 days.

Systems don’t change businesses. Installed systems do.

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