Cash Scenario Planning

Cash scenarios model what happens to liquidity when key assumptions break: revenue misses by 20%, a major customer delays payment by 90 days, or a planned fundraise takes 3 months longer than expected. The base case tells you the plan. The downside case tells you the survival constraints. The actions you would take in the downside case should be planned — not improvised in crisis. Cash scenario planning is pre-crisis management.

1. Revenue Shortfall Scenario Model cash position if revenue misses by 15-20% for two consecutive quarters. What is the runway impact? At what point do you need to reduce spend, and which categories are first? If Q1-Q2 miss reduces runway from 18 months to 11 months, the hiring freeze trigger should be predefined — not debated when the cash report arrives.
2. Collection Delay Scenario Model the impact of your top 5 customers delaying payment by 60 days simultaneously. This is not theoretical — economic downturns trigger exactly this behavior as procurement departments extend payment cycles to manage their own cash. If 5 customers representing $3M in quarterly billings delay 60 days, you have a $3M cash gap to bridge.
3. Contingency Actions For each scenario, pre-define the response: at 14 months runway, pause non-essential hiring. At 12 months, freeze all hiring. At 10 months, reduce discretionary spend by 25%. At 8 months, initiate bridge financing conversations. These triggers and actions should be agreed upon before they are needed — decisions made in crisis are worse than decisions made in calm.