Salon, spa & fitness
Salon Cash Flow Calculator
Works salon cash flow, where prepaid balances make the account look better than it is.
Result
Profit and cash are different things and a growing contractor can run out of cash while profitable, because the work is paid for before the invoice is. This models collection speed, not seasonality.
Get a Free Business AuditHow the calculation works
Receipts against the monthly cost base and the opening balance, giving the running position. Salons collect at the point of service, which is a cash flow advantage, and the complication is prepaid packages and memberships, which bring cash in ahead of the work and create an obligation the account does not show.
What moves the number
- Point of service collection, which is favourable.
- Prepaid package and membership balances outstanding.
- Fixed monthly base including rent and payroll.
- Seasonal variation in bookings.
Where this one goes wrong
Spending prepaid balances as though they were revenue is the mechanism that puts otherwise healthy salons in difficulty, because the services still have to be delivered and the staff paid to deliver them when the money has already gone. Hold the obligation. Payroll is the other fixed commitment, and in a trade with seasonal bookings a reserve covering payroll through the quiet weeks is what prevents decisions being made out of necessity.
Before you quote
- Track prepaid balances as an obligation, not available cash.
- Hold a reserve covering payroll through the quiet season.
- Map seasonal booking patterns from your own history.
Questions
About this calculator
Why do salons with good revenue run short of cash?
Usually prepaid balances spent as revenue. The services still have to be delivered and the staff paid when the money has already gone, which turns a sales success into a cash problem some months later.
Is a salon's cash cycle favourable?
Generally yes, since clients pay at the point of service rather than on terms. That is a real advantage over trades that invoice, and it makes prepaid obligations and seasonality the main things to manage rather than receivables.
How much reserve does a salon need?
Enough to cover payroll and rent through the quiet season, which varies by market. The point of the reserve is that decisions made with cash in hand are better than decisions made without it, particularly about staff a salon wants to keep.
The formula
cash tied up = daily invoicing x days to get paid
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How to use this calculator
- Invoiced per month ($). Enter your own figure; the page starts at $48,000.
- Payment terms (days). Enter your own figure; the page starts at 30.
- Days guests actually take. Enter your own figure; the page starts at 46.
- Costs paid out per month ($). Enter your own figure; the page starts at $38,000.
- Cash in the bank now ($). Enter your own figure; the page starts at $22,000.
The result updates as you type, so you can try a figure, see what it does to days of funding gap, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Invoiced per month | $48,000 |
| Payment terms (days) | 30 |
| Days guests actually take | 46 |
| Costs paid out per month | $38,000 |
| Cash in the bank now | $22,000 |
What comes out
| Result | Value |
|---|---|
| Days of funding gap main result | 16 |
| Cash tied up in invoices | $73,600 |
| Monthly surplus | $10,000 |
| Months of cover | 999.0 |
There is $73,600 sitting in unpaid invoices, and customers take 16 days longer than your terms allow. That gap is the money you are lending them for free.
How sensitive the answer is
Holding everything else steady and changing only invoiced per month, this is what happens to days of funding gap. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Invoiced per month ($) | Days of funding gap |
|---|---|
| $24,000 | 16 |
| $36,000 | 16 |
| $48,000 example above | 16 |
| $72,000 | 16 |
| $96,000 | 16 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Invoiced per month ($)
- A money amount, starting at $48,000.
- Payment terms (days)
- A number, between 0 and 180, starting at 30.
- Days guests actually take
- A number, between 0 and 365, starting at 46.
- Costs paid out per month ($)
- A money amount, starting at $38,000.
- Cash in the bank now ($)
- A money amount, starting at $22,000.
What the results tell you
| Result | What it is |
|---|---|
| Days of funding gap | The headline result. A number. |
| Cash tied up in invoices | A money figure. |
| Monthly surplus | A money figure. |
| Months of cover | A decimal figure. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.