What a 12-month cash model tells you that your bank balance doesn't
Your bank balance tells you where you are. It says nothing about where you're going — and every expensive surprise we've seen came from confusing the two. A healthy balance with a hire, a tax bill and a slow-paying customer already in motion can be six months from trouble, and nothing on the account statement will warn you.
The fix is not a complicated system. It's a 12-month cash model: one row per month, money in, money out, running balance. The real value shows up when you use it to compare decisions before you make them. Here's a worked example, with illustrative numbers, for a company holding €480k and deciding whether to make a senior hire.
Cash balance, next 12 months — three scenarios
€ thousands · illustrative numbers
Hover the chart for monthly values. The hire starts in month 3; the revenue ramp begins in month 5.
What the chart actually says
On the current plan the company burns €40k a month and runs out in exactly twelve months. Comfortable-feeling, but the clock is running.
Add the senior hire and nothing else, and runway drops to nine months. That's the line most founders never draw — the hire feels affordable because the balance today barely moves.
The third scenario is the interesting one: the hire plus the revenue they're being hired to unlock. If the ramp lands, the curve flattens around month 8 and turns upward before year end. The hire doesn't shorten the runway — it ends the runway question entirely.
So the decision becomes a real question
Without the model, the discussion is "can we afford this hire?" — answered by gut feel. With it, the discussion becomes "do we believe the revenue ramp?" That is a much better question, because it's about your business, and you can de-risk it: start the hire a month later, tie it to a pipeline milestone, or line up a credit facility as a buffer.
That's the whole trick. A cash model doesn't predict the future; it converts vague unease into specific questions you can actually answer.
We build models like this — usually more detailed, always this clear — as part of our fractional CFO work. If you can't answer the runway question in five minutes, let's talk.