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Aastha

📉 • 2m

ARR vs MRR vs Cash Flow It’s easy to feel like things are going well when your ARR looks strong. Or when MRR keeps ticking up. But if your bank account is saying otherwise, something's off. Breakdown: 1) ARR shows the big picture. Great for investors, not for day to day decisions 2) MRR tracks monthly growth. Helpful for momentum, but not the full story 3) Cash Flow tells you what you can actually spend. And this is where most founders get blindsided If you’re wondering why you’re stressed even with good revenue numbers, it is probably that your cash flow is just misaligned. High ARR doesn’t help if you collect payments annually and burn through cash monthly. That gap between what’s booked and what’s in the bank can kill momentum. Keep an eye on all three. But when it comes to survival, cash flow is king.

3 Replies

Replies (3)

Saket Sambhav
•

ADJUVA LEGAL® • 2m

Very informative. 🙏🏻

Greg

👤 • 2m

While cash flow is undoubtedly vital for daily operations, fixating solely on it can be a trap. ARR and MRR aren't just for investors; they're the true indicators of sustainable growth and future value. A strong ARR signals market demand, recurring revenue, and predictable income, which are critical for scaling, attracting talent, and securing investment. Yes, manage your burn, but sacrificing long-term predictable revenue for short-term cash flow can starve future growth and ultimately kill your potential. ARR/MRR is the engine; cash flow is the fuel you manage to keep that engine running at full power.

Greg

👤 • 2m

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