Money follows speed....
The faster you can decide
The faster you can execute
The faster people act
The faster money will flow to you.
Money LOVES speed!
Delays – no matter how much you justify them delay results and money flow too.
How fast money moves through your business and into your bank account? I’m am sure many of you have a vague idea about this, but not quite as an actual number.
If you want to find out how to identify this key number then read on…
One of the hardest decisions business owners have is knowing what to focus on and ignoring everything else. But I am not convinced that this is the case as there are too many things competing for your attention.
Recently I witnessed yet another mistake in one of my client's business (who I have been working with for almost 2 decades now.
As the business grows, people get promoted but they are not given decision making power, nor they want to (it is too risky and they don’t want risk). You see, their responsibilities grow but their authority doesn't. They get fancy titles though and they feel all very important.
Without systems everything slows down and systems don't always follow growth. Employees and management can't make decisions so things getting delayed.
How can you discover delays in your business?
There are a number of ways but the simplest one is to find out the answer to the questions below and keep tracking the results over time.
Here are the key questions to identify the answers to:
Have invoices gone out? – your sales income for the month.
Cash collected and debtors days.
How much WIP (work-in-progress) you have stuck in your operations?
How much inventory are you sitting on or you are short of?
Your payment run schedule – how often in a month are you paying your supplier invoices?
All of the above questions will help you identify the delays in your business that impact your cash flow. The answers also uncover why money loves speed!
With the client I mentioned above, money from their clients is coming 2x slower than the money paid to suppliers. This puts pressure on cash flow, so they use factoring to help them finance their cash shortage due to the long cash cycle.
Another client of ours must pay 90 days in advance for their inventory. As you can image that also puts pressure on their cash flow and they had to resort to debt to finance this (they want to get invoice finance, but that is still in negotiation).
Everyone in your business need to understand what they are doing to your cash, because people will change their behaviours once they understand what they are doing to your business.
Bottom line is that cash is a constraint of your. And cash loves speed.
Regardless of the stage of your business e.g. pre-start up, start-up, early growth, maturity (10-15 years +) or harvest/stability (10-20+ years) cash is a key resource that you need to always monitor.
What's next?
Cash flow is not something you could ignore. It follows you everywhere you go, that’s why it is so important to make it your number ONE priority.
Here is a fraction of what you will enjoy when you follow our process:
Improve your cash flow position – that is cash at bank as well as your cash in your bank account. Believe it or not you will be able to discover the “trapped cash” and release it into your bank account.
Shorten your cash conversion cycle – that is the time taken for your cash to flow back into your bank account from the minute you spend it on anything. Use our Cash Acceleration tool to stay focused on the improvements.
TODAY: map out your revenue cycle (sales order to cash) to see if you can identify opportunities for streamlining the processes or improving decision making. The secret is to approach this with an open mind and challenge what you see as "the norm".
You need funding or factoring facility to solve your Working Capital problem, right? Wrong! The “usual stuff” totally backfires when you really want to increase your cash flow. Here is a new approach, that’s faster, simpler to implement, and better.
This is a proven way to improve your cash flow and positions you as the trusted authority in front of your staff, partners, suppliers and your bank manager.
Specifically designed for people who are not the “numbers people”. This is really important for you because it puts you in the category money people who know “smart money”.
If you are ready to take your cash flow to the next level then you need to download our Working Capital tool. It has the key metrics for evaluating your Working Capital effectiveness. You will be able to calculate these in a few minutes, as the formulas are already there for you.
Please share, tweet or recommend to those you feel might find this of interest.
Comments