SaaStr founder Jason Lemkin emphasized the importance of collecting at least 100% of monthly recurring revenue (MRR) in cash each month, ideally 110% or more, in a July 24 post. He highlighted that many B2B SaaS startups struggle with cash collections, especially as they scale and move upmarket, where invoicing replaces payment gateways and payment terms extend to Net 30, Net 60, or longer.
Lemkin explained that early-stage startups often have straightforward payment systems where cash flows directly into bank accounts. However, as companies close larger deals and add services requiring invoicing, they face challenges in following up on payments. He noted that more than half of invoices do not get paid automatically, requiring active collection efforts. Without a dedicated finance team, startups risk delayed or missing payments, which can shorten their financial runway.
The issue is significant because many SaaS startups rely on annual contracts that promise substantial cash inflows, but the actual cash collected often falls short. Lemkin suggested tracking cash collections as a key performance indicator (KPI) to avoid process failures in finance. Falling below 100% cash collection of MRR signals a problem that could jeopardize the company’s financial health. This advice aligns with broader industry concerns about cash flow management in scaling SaaS businesses.
Jason Lemkin’s guidance underscores the need for SaaS startups to implement robust finance processes early. He shared this insight on SaaStr’s platform on July 24, 2026, reinforcing that consistent cash collection is critical for sustaining growth and maintaining runway in the competitive SaaS market.