Growth Strata•Gems Magazine Growth Strata•Gems Magazine Fall 2018 - Page 8

CASH FLOW What Clues Are In Your Cash Flow Story? WHAT STORY IS YOUR CASH FLOW TELLING? A s a sales engineer, I spent a lot of my corporate career ignoring financial reports, avoiding financial meetings, and dodging anything to do with bean counters. I now see the error of my old ways. Since moving into the world of training and coaching business leaders in best practices in Strategy, Execution, People, and Cash, I’ve found the quickest and often the most sustainable wins come from studying cash flow stories. By far. I once found more than $1.2 million worth of improvements in one afternoon for a company with $5 million revenue. That’s a pretty quick payback, don’t you think? That 8 | FALL 2018 company was bleeding cash, and their bankers were about to restrict their credit. During that afternoon, we reviewed their cash flow story, and their team committed to actions that dramatically improved their cash flow. Within months, they turned the business around, and the owner avoided a cash flow calamity. But there’s another benefit to understanding cash flow besides finding quick wins. Every company’s cash flow tells a story. Like a good novel, your cash flow story unfolds over time and provides clues to many underlying themes in your business. Your cash flow story provides clues to your strategy, your execution, your people and culture, your leadership, etc. What’s your cash flow story telling you? Do you have abundant cash? Are you satisfied with your profit but “cash is tight”? Does every $100 of new revenue enhance your cash or suck cash? Studying the facts contained in your cash flow story provides a brilliant way to diagnose the root cause of your results, prescribe the steps you’ll need to take to improve, and serves as the basis for making accurate predictions about your future. This is what Jack Stack meant when he famously said, “Your future is in your financials. You just need to understand and act on them.”