Plain and Simple: Bright Business Insights Summer 2017 | Page 2


Better Management in 13 Weeks
At the beginning of 2017 you were probably motivated to make huge financial strides in the months ahead . But as the weeks began to pass , the struggle of managing the day-to-day operations of your business began to demand more time than you expected . Now it ’ s summer . The year is more than halfway over and you are left wondering what happened . Perhaps the answer lies in the effectiveness of your cash management strategy .
More often than not , a business ’ s leadership team will put forth a lot of time and effort into mapping out the company ’ s budget for the year ahead . Then one thing leads to another and the budget they worked so hard to put together becomes stale , outdated and forgettable . Worse yet , any financial objectives outlined within those pages essentially go down with the ship . If this scenario sounds familiar , a 13-week cash flow projection just might be the solution you ’ ve been looking for .
A 13-week cash flow projection provides you and your stakeholders with a detailed representation of your business ’ s well-being and empowers your management team to become more accountable in your business ’ s success . Once you have a better idea as to how much money is going out and coming in ( and why ), you will be positioned to make better decisions and develop timely and attainable goals . Here ’ s what you do :
• Generate a strong projection of your financial resources . Be sure to put in the effort to research and include data from a variety of sources .
• Analyze your accounts receivable to determine ways to quickly turn them in to cash or to better manage your sales and improve profitability .
• Review your current inventory levels . Excess inventory is cash that has already been spent and is not being used effectively . Therefore , take the time to review and segregate inventory that is old or obsolete and then consider whether it can still be used to generate cash .
• Review and organize your accounts payable , which will help you manage when payments are made .
• Take a look at your non-core assets and determine how much money you are spending to offer them . Do they cost too much to hold on to ? Ask yourself if they are viable and whether they align with your current client base . If not , maybe you should discontinue the offering in favor of an offering or initiative that produces greater revenue for your business .
Remain Realistic
A proper cash flow projection is based on facts – not on what you expect ( or hope ) will happen . Your first step should be to look at your company ’ s historical trends , current initiatives and any internal and external factors that may impact the financial security of your business , including past , present and future billing and payment patterns . Also make sure that the cash your business needs is based on fixed and recurring costs . From there , you can then estimate variable costs and expected sales .
Once you have compiled your historical data and have put your cash flow projection in to action , update your data with current figures and information weekly , which is important if you intend on using your cash flow projection as a management tool . With regular maintenance , your projection will become an accurate representation of your business ’ s financial wellness while providing you with a framework for generating short- and long-term success .
Would you like to have an accurate cash flow projection readily available to help you make critical business decisions but need help setting getting started ? I am available to take your call .
by : Tom Jeffries
CPA , Principal 212 North Washington St .
Millersburg , OH 44654-1122 ( 330 ) 521-4533 tom . jeffries @ reacpa . com