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Gross Revenue vs. Cash Flow: What topline growth doesn’t tell you

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It’s easy to get excited about revenue growth.

The numbers go up. The charts look good. And the board is happy.

But if you’re not watching cash flow at the same time, you’re not actually seeing the full picture.

In 2024, the average SaaS startup grew revenue by 30%, but most only had 10-20% free cash flow margins.

That gap is where risk hides.

The difference, in plain terms

  • Gross revenue is the total income from sales, regardless of when the cash actually arrives.
  • Operating cash flow is what hits your bank account, minus the cost of running the business.

Revenue follows accrual rules. Cash flow doesn’t.

That distinction matters. Especially when timing, payment terms, or deferred contracts come into play. Say you sell an annual SaaS subscription for $12,000 in January. On accrual, you book $1,000 revenue each month. But cash-wise? You’ve got all $12,000 in January. Revenue smooths over time. Cash doesn’t wait.

In Runway, both metrics are pulled from your live data, and always kept up to date — so you can see revenue and cash side-by-side, and catch when they drift apart.

Why revenue can mislead

You close a $500K contract in Q4. It shows up in your income statement. But the customer pays in 90 days, so that won’t help you cover today’s bills.

You celebrate the quarter. Then struggle to make payroll in January.

This happens all the time, especially with:

  • Deferred revenue — cash collected in advance for future services.
  • Unpaid receivables — revenue recognized, but still sitting in someone else’s account.

You can’t spend revenue.

You can only spend cash.

The risk in high growth, low cash

Imagine a startup that generates $2M in Q2 revenue, yet faces negative $500K in operating cash flow.

  • Bookings are up
  • Team’s expanding
  • Everyone’s celebrating

But without actual cash, they’re relying on debt, fundraising, or luck.

That’s not sustainable.

And it’s why high growth without cash discipline is often the first sign of trouble.

A better way to read performance

Here’s how finance teams use Runway to align revenue and cash flow — and get ahead of surprises:

1. Match revenue to cash collections

  • Run a live aging report on accounts receivable, to see where your cash could get stuck.
  • Adjust revenue down for money you haven’t yet collected. Look for invoices >60 or >90 days overdue. If you booked $100K, but $30K of that is 90 days overdue, the cash view is $70K.
  • Focus your plan on collections, not just bookings.

2. Strip out non-cash noise

  • Find depreciation, amortization, and stock-based comp. These hit your P&L, but not your cash.
  • Strip them out. If net income is $50K but $20K is depreciation, your cash from operations is $30K.

Runway lets you quickly isolate operating cash flow, and see what’s actually available to spend.

3. Build rolling cash forecasts

Runway lets you build live cash forecasts that update in real time.

  • Plug in your payment terms, contract timing, and spend assumptions.
  • Quickly simulate best, base, and worst-case cash outcomes.

Need to hire in Q4? See how it affects runway in Q1 — before you commit.

4. Track the right KPIs

Revenue is just one input. Combine it with:

  • Free Cash Flow = Operating Cash Flow – Capex
  • Free Cash Flow Margin = Free Cash Flow / Revenue
  • Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities

These tell you whether your growth is actually funded or just accounting noise.

Aim for:

If you’re showing 50% growth and a 10% FCF margin, that’s strong on both fronts.

Case study: When revenue & cash don’t line up

A SaaS startup books $800K in Q2. Net income: $100K.

But only $450K hit the bank that quarter.

  • $200K was from prepaid annual subs
  • $150K was still unpaid receivables

With Runway, the finance team breaks it down:

  • Cash flow is lagging revenue by over 40%.
  • Growth looks great on paper, but the margin for error is actually shrinking.

They run updated forecasts, flag collections risk, and delay a new hire by a month.

Crisis avoided.

Best Practices: Making revenue & cash work together

  • Always present both. Revenue and cash flow belong side-by-side, with a variance line that forces you to explain the gap.
  • Build cash-aware forecasts. In Runway, you can simulate how long-term contracts, churn, or late payments affect actual liquidity.
  • Use alerts, not instincts. If free cash flow drops below a threshold, notify the right people.

Frequently Asked Questions

1. How do I compare gross revenue and cash flow in Runway?

You can create a custom, interactive dashboard to see them side by side at a glance.

2. Why does operating cash flow matter more than gross revenue?

Because it’s what you can spend.

Revenue may be booked, but cash is either collected or not.

3. What kind of items distort the cash picture?

  • Stock-based compensation
  • Depreciation
  • Amortization

These aren’t actual expenses; they’re accounting artifacts. Strip them out to get to real cash flow.

4. Which KPIs blend both views?

  • Free Cash Flow Margin = Free Cash Flow / Revenue
  • Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities

Strong SaaS companies target 20%+ free cash flow margins and >75% gross margin.

5. How often should I update the cash forecast?

  • Weekly if you’re growing fast, raising, or hiring
  • Monthly if you’re steady-state

But always update after big wins, delayed collections, or unexpected costs.

Book a demo to see how Runway always keeps your model and forecasts up to date.