cash flow management made very easy

Fast Strategy

Growing the value of your business

what grows value?

§  financials

§  sustainability

§  market power

§  cyclical timing

let’s look at financials

cash flow management 101

cash flow always looks complicated

but it’s not: there are only three bits

cash from operating activities

cash from investing activities

cash from financing activities

what those three things mean is

what you do

what you’ve got

how you pay for the first two

why bother doing it better?

more money in the bank

means less debt or

better cash management

what can you do?

run a health check on all three bits

operating cash: what you do

2"

•  get more money in •  get it in quicker

•  pay less money out, •  pay it out slower

investing activities: what you’ve got

•  sell redundant assets •  apply resources to new processes •  own or lease •  rent or buy

financing cash: how you pay for it

4"

•  get best terms •  raise equity •  reinvest profits

cash flow matters from start to finish

warehousing and distribution

manufacturing/service executiion

materials scheduling

sales order processing

forecast and supply chain planning

inventory management

product range management

get the whole firm involved

managers

finance

operations

sales

the goal is to reduce the cost of capital

“the greater the difference between your cost of capital and your return on capital the greater the value you create”

a dollar saved means more than a dollar in value

A real example:

cash flow management saved my client $758 a month

he sold the business for 7 times earnings

that added over $60,000 to his sales price.

here’s how

$768 per month = $9,216 per year X 7 = $64,512

how to get a free Lexus:

RRP = $63,750

how are you going? Rate yourself (5 = great; 1 = not so good)

Business Audit - A simple management checklist

© Alan Hargreaves Page 2

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1. Financials

RATING (CIRCLE) ACTION

1. Working Capital: How do you rate your working capital management? Are terms and conditions methodically structured and clearly stated? Are they monitored and applied? Are accounts receivables firmly managed?

2. Investing Cash: Do you run a lean asset base? Do you regularly review your asset base, eliminating redundant investments, maintaining the most cost effective mix of owned and leased or rented assets?

3. Funding: Is the funding structure that finances your business the optimal model? How often do you review relationships with banks, shareholders and other intermediaries?

4. Strategic Integration: Is cash flow management a strategic priority across the entire spectrum of your firm: management, sales, marketing, operations, finance?

5. Monitoring: Have you identified your preferred KPIs or relevant ratios that determine the overall performance and value of your business? Are they the right ones? What are the key strategies you can put in place to optimise performance in these areas? What is the most important one for cash flow management?

YOUR TOTAL RATING (A) /25

want to go better? Think about some of these working capital •  terms and conditions

•  inventory management •  payment incentives •  preferred suppliers

investing cash •  divest legacy assets •  reassign resources •  rent or buy •  lease or own

funding •  renegotiate credit lines •  add debt •  dividend policy •  shareholder funding

whole-of-firm •  full spectrum cash management •  forecast to fulfill •  holistic strategies •  cost-of-capital targets

monitoring •  use of KPIs •  appropriate ratios •  link compensation to cash flow •  decision yardsticks

fast

slow

complex simple

what’s the fastest, simplest thing you can do NOW

for immediate results, try my free app

it show lots of ways to boost your business

you just rate yourself

and see what you can do to go better

you can find many more ways to increase the value of your business at: