Cashflow

Our 5th Focus Area

Cashflow

In this phase, we make sure the business has the required cash to fuel rapid growth.

Most private businesses place emphasis on their Profit & Loss and Balance Sheet, but scant regard for cashflow. A cashflow report is often non-existent.

Growth can easily suck up lots of cash, and if cash is not managed properly, the business can run out of it very quickly.

Our first action in a project is to work with the internal accountant and develop a cashflow model that enables the business to grow AND generate more cash, rather than what is normally the reverse.

We get the accountant into a rhythm of producing a daily, weekly or monthly cashflow projection. It becomes a key tool for management and decision-making.

It is crucial we understand how long it takes for a dollar to get from Point A to Point B in the business. Point A is where you spend a dollar and Point B is where the dollar has worked its way through the business model and back into your pocket. Think Point A is your left-hand pocket and Point B is your right-hand pocket.

Technically, we call this measure, the Cash Conversion Cycle, and I gets published on our ScoreTrak® dashboard.

We brainstorm specific initiatives on shortening the Cash Conversion Cycle