Cash Break-even

Definition

Cash break-even is when cash inflows cover cash outflows (net burn is ~0). It can differ from accounting break-even due to timing.

Example

If monthly inflows are $500k and outflows are $500k, cash break-even is reached.

How to use it

• Cash break-even focuses on cash timing (collections, payables, prepay), not accounting profit.
• A company can be accounting-profitable but still cash-negative if working capital is consuming cash.
• Track cash break-even alongside runway to gauge survival risk.

Common mistakes

• Confusing cash break-even with profitability in financial statements.
• Ignoring collections timing (AR) and deferred revenue effects.
• Treating one-time cash events as sustainable break-even.

Why this matters

This term matters because cash timing and risk are usually the difference between a plan that works on paper and a plan that survives. Use consistent definitions so decisions are comparable over time.

Practical checklist

• Write a 1-line definition for "Cash Break-even" that your team will use consistently.
• Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
• Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
• Use a calculator that references this term (e.g., Cash Runway Calculator) to sanity-check assumptions.
• Read the related guide (e.g., Runway and burn: gross vs net burn, working capital, and cash levers) for context and common pitfalls.

Where to use this on MetricKit