What Is Cash Flow Analysis?
Cash flow analysis is the structured review of how money moves in and out of a business bank account.
In MCA and small business lending, it is one of the most important underwriting tools because it reveals both strength (consistent revenue, recurring deposits) and risk (NSFs, overdrafts, volatility).
Operators rely on this analysis to understand repayment ability. Instead of focusing only on revenue size, cash flow analysis provides a fuller picture of whether a merchant can meet repayment obligations under an advance or financing program.
How Does Cash Flow Analysis Work?
Cash flow analysis looks at the movement of money over time.
- Revenue capture: Identify recurring deposits such as credit card settlements or payroll receipts.
- Expense mapping: Track fixed obligations such as rent, utilities, ACH debits, and loan payments.
- Risk flags: Detect overdrafts, NSFs, or large irregular withdrawals.
- Trend review: Highlight volatility, negative days, or seasonal shifts in cash flow.
In Heron, cash flow analysis is automated and deeply integrated into the scrubbing workflow.
- Statement parsing: Bank statements are converted into structured data fields.
- Metric calculation: Metrics such as average daily balance, overdraft frequency, and cash-flow volatility are derived automatically.
- Risk surfacing: Red flags like external debt payments or stacked advances are highlighted.
- CRM write-back: Parsed insights are written directly into CRM fields, creating underwriting-ready records.
- Next action: Underwriters receive a concise view of financial stability and repayment capacity without combing through statements manually.
This makes cash flow analysis instant and repeatable at scale.
Why Is Cash Flow Analysis Important?
For brokers and funders, cash flow analysis is important because it directly informs deal eligibility. A merchant with strong, consistent inflows but moderate obligations is a safer candidate than one with high volatility and frequent overdrafts.
Heron improves this process by automating the analysis that used to take hours per packet. This allows brokers and funders to handle more deals, cut manual effort, and reduce risk by catching early warning signs.
Common Use Cases
Cash flow analysis is applied in nearly every underwriting scenario.
- Evaluating repayment capacity for MCA or RBF eligibility.
- Detecting stacking risk from recurring ACH debits to other lenders.
- Identifying NSFs and overdrafts as signals of financial strain.
- Highlighting seasonality to contextualize cash flow swings.
- Producing clean, structured metrics for CRM reporting.
FAQs About Cash Flow Analysis
How does Heron automate cash flow analysis?
Heron parses bank statements, calculates key metrics such as volatility and average daily balance, and flags risk signals like negative days or NSFs.
Why is cash flow analysis valuable for MCA brokers and funders?
It reduces underwriting time, provides objective financial metrics, and improves decision accuracy by focusing on real merchant cash behavior.
What outputs should teams expect from cash flow analysis in Heron?
Teams receive structured CRM fields showing revenue trends, obligations, and risk flags, along with underwriting-ready packets that eliminate manual calculations.