Series B Cash Strategy: 13-Week Forecast, Burn Quality, and Investor Controls

Foundational Shift: From Bookkeeping to Strategic Finance

The Series B round has closed, and the new capital is in the bank. For a brief moment, there is a sense of relief. That feeling is quickly replaced by a new, more complex set of pressures. Your burn rate is climbing, hiring is accelerating, and revenue streams are becoming more complicated. The spreadsheet that managed your seed-stage finances is now groaning under the weight of this new complexity.

The core challenge is no longer just survival; it is about strategically deploying significant capital without losing control. Learning how to manage cash flow after series b is not just a financial task, it is a foundational pillar for reaching the next stage of growth and satisfying the expectations of your new investors.

At the seed stage, finance is often about bookkeeping: recording historical transactions in QuickBooks or Xero to ensure bills are paid and taxes are filed. It is a backward-looking exercise. After a Series B, this is no longer enough. The shift must be toward strategic finance, a forward-looking discipline focused on using financial data to make informed decisions about the future.

The reality for most Series B startups is more pragmatic: there is not a large finance team, and the responsibility still lies with a founder or a head of finance. This transition requires understanding a critical distinction: cash flow versus P&L profitability. Your P&L can show a profit, but if your customers pay slowly or you have significant upfront costs, you can run out of cash. Cash is the oxygen for your company, and managing its flow becomes the primary directive. See the Cash Management Between Funding Rounds guide for UK startups.

Scaling finance operations means moving beyond simply tracking what was spent. It involves building a system to forecast what you will spend and when you will receive cash. This proactive stance is essential for handling cash reserves during rapid growth, ensuring you have the capital ready for payroll, strategic investments, and unexpected challenges. The goal is to transform your financial function from a scorekeeper into a strategic partner in the business.

The 13-Week Cash Forecast: Your Financial GPS

A static annual budget is insufficient for a fast-growing company. The most effective tool for financial forecasting for expanding startups is the 13-week rolling direct cash forecast. This instrument acts like a GPS, providing a near-term view of your liquidity that allows you to anticipate shortfalls and make course corrections. Thirteen weeks represents one fiscal quarter, a horizon that is long enough for strategic planning but short enough to maintain a high degree of accuracy.

The direct method is the most practical approach. You start with your opening cash balance for week one and then meticulously map out all expected cash inflows and outflows for each of the next 13 weeks. This is not an accounting exercise; it is an operational one.

Cash Inflows

This requires a detailed understanding of your revenue models. For a SaaS business, this includes recurring subscription payments, noting that a payment processor delay like Stripe's 2-day rolling payout means cash arrives after the charge. For B2B companies in SaaS or professional services, this is about actual invoice collection. In practice, we see that invoices with 'Net 30' terms often result in cash collection in 45-60 days. In fact, a recent 2023 study found that average B2B Days Sales Outstanding (DSO) hovers around 50 days, a significant lag to plan for. E-commerce businesses must forecast daily sales from platforms like Shopify, while biotech and deeptech firms need to project grant disbursements and R&D milestone payments.

Cash Outflows

Categorizing outflows brings clarity to your spending.

1. Non-Negotiable Outflows: These are recurring, predictable costs. They include payroll, rent, tax payments, and any loan servicing. These are the first items to populate in your forecast.
2. Strategic Growth Bets: This category covers discretionary spending aimed at growth, such as new marketing campaigns, key engineering hires, or new R&D equipment. These are the levers you can pull to either accelerate growth or preserve runway.
3. General Overheads: This includes software subscriptions, utilities, and other operational costs.

What founders find actually works is updating this forecast every single week. You replace the previous week’s forecast with actual cash movements and add a new forecast week at the end. This rolling discipline creates a constantly up-to-date picture of your financial health, helping you accurately project weekly cash needs and avoid a mid-round liquidity crunch.

Burn Quality: How to Manage Your Burn Rate Control Strategies

With millions in the bank, the temptation is to spend aggressively to capture market share. However, every spending decision is a trade-off between growth and runway. This is where burn rate control strategies become critical. The key question shifts from “How much are we burning?” to “What is the quality of our burn?”

This involves distinguishing between strategic 'good burn' that fuels efficient growth and inefficient 'bad burn' from operational waste. A framework for evaluating this is essential for optimizing working capital for growth.

For a SaaS company, the ultimate measure of burn quality is its relationship to new revenue. A useful benchmark is the ratio of '$1 of net burn to new recurring revenue', often called the Burn Multiple. For a healthy growth-stage SaaS company, a ratio between 1.0x and 1.5x is considered strong. If you are spending $3 to generate $1 of new annual recurring revenue, it’s time to scrutinize your customer acquisition costs.

For deeptech and biotech startups, the calculus is different. Burn is primarily for R&D, and its quality is measured by progress against key milestones. Meticulous tracking is vital, especially given differing tax treatments. For US companies, changes to Section 174 of the tax code require the capitalization of R&D expenses, impacting tax planning. In the UK, companies can leverage the generous HMRC R&D scheme for tax relief. Accurately tracking these costs is not just for internal management but also for maximizing tax benefits.

Your 13-week cash forecast is the perfect tool for scenario planning. Model the impact of different decisions. What happens to your runway if you hire five new engineers? What if a major customer delays payment by 30 days? By running these scenarios, you can make data-driven decisions that balance aggressive growth bets with the non-negotiable need to preserve your cash runway. You might also consider venture debt as a complementary runway tool.

Implementing Investor-Grade Controls for Scaling Finance Operations

Series B investors and your board expect a higher level of financial discipline. This does not mean you need a massive finance department, but it does mean implementing simple, robust controls to protect company assets and ensure data integrity. Setting up these investor-grade cash controls satisfies a key expectation and prepares you for future audits and funding rounds.

A scenario we repeatedly see is the difference this makes during due diligence. A company with clean, well-documented controls can close a Series C round smoothly. Another, with disorganized records, faces weeks of delays and a loss of investor confidence as they scramble to answer questions.

Focus on the 'Big 3' essential financial controls:

1. Cash Disbursements: The goal is to prevent unauthorized or wasteful spending. A practical approach is to set clear thresholds. For example, any un-budgeted spending over a $10,000 threshold could require a one-page ROI summary for approval. For payments, any amount over a $5,000 threshold could require a two-person approval process. Tools like Ramp or Bill.com can help automate these workflows, even for a lean team.
2. Payroll: Given that payroll is often the largest expense, its accuracy is paramount. A simple control is segregation of duties: one person prepares the payroll run, and a different senior person reviews and approves it before processing.
3. Revenue Recognition: This is a common point of failure in due diligence. Cash received is not the same as revenue earned. For US companies operating under US GAAP, the ASC 606 standard provides a framework for when and how to recognize revenue. For UK companies, FRS 102 governs these rules. Correctly implementing these standards in QuickBooks or Xero is crucial. It ensures your financial statements are accurate and that you are not overstating your performance to the board and investors.

Practical Takeaways

Successfully navigating the post-Series B landscape requires a deliberate evolution of your financial operations. The shift from reactive bookkeeping to proactive, strategic cash management is the most critical change you will make. It's about building a system, not just tracking numbers.

Your first step is to implement a 13-week rolling direct cash forecast. This is your early warning system and your primary tool for managing multiple revenue streams and a rising burn rate.

Second, embed the concept of 'burn quality' into your decision-making. Constantly question whether your spending is efficiently driving growth or simply draining reserves. This discipline is central to balancing aggressive goals with runway preservation.

Finally, begin layering in simple, investor-grade controls. Focus on cash disbursements, payroll, and accurate revenue recognition. These processes protect you and build the trust with your board and investors that is essential for your next phase of growth. For founders holding excess capital, consider sweep accounts or our guide to short-term treasury investments to optimize idle cash.

This all culminates in your ability to present a clear, concise, one-page financial dashboard to your board. It should include your cash balance, runway in months, monthly net burn, a key top-line metric like new bookings or ARR, and your Days Sales Outstanding (DSO). This dashboard is the output of a well-managed financial engine, providing the confidence that you are not just handling cash reserves during rapid growth, but are strategically deploying them to win. Continue at the Managing Cash Between Rounds hub.

Frequently Asked Questions

Q: What is the difference between a direct and indirect cash flow forecast?
A: A direct forecast, which we recommend, projects actual cash movements by tracking expected inflows like customer payments and outflows like payroll. An indirect forecast starts with net income from the P&L and adjusts for non-cash items. For a fast-growing startup, the direct method provides a more accurate, operational view of liquidity.

Q: When should a Series B company hire a full-time CFO?
A: While a founder or head of finance can manage this initially, consider a full-time CFO when financial complexity scales significantly. This often happens when you plan for a Series C, expand internationally, or when financial modeling and strategic partnerships become a major part of the CEO's workload.

Q: How do you manage cash flow with multiple revenue streams?
A: The 13-week cash forecast is the key tool. Create separate lines within your 'Cash Inflows' for each revenue stream, such as SaaS subscriptions, professional services invoices, and e-commerce sales. This helps you model their different payment cycles and seasonality, giving you a consolidated view of your total expected cash.