How the numbers work
Payback period
How long it takes to earn back what you put in.
The payback period is how many years it takes for the cash the business generates to repay the total investment.
Foundation follows your cumulative cash flow year by year: it starts at minus the total investment and adds each year's cash flow. Payback is the point where it crosses zero. When that happens partway through a year, Foundation estimates the point within the year.
If the cumulative cash flow never turns positive within your projection, the dashboard shows payback as not reached.
Reading it
- Compare payback with the useful life of your main assets. Paying back an espresso machine in 9 years when it lasts 7 is a warning sign.
- Payback ignores the time value of money: 1 today and 1 in five years count the same. NPV accounts for it.
- Lenders often look for payback within the loan term.