Cash Flow Improvement: The driving force behind your success
If you want to stand out as finance professional and win more clients, you must begin with what’s at the core of your work – money.
Although we may believe we are providing value to businesses by doing their accounts, but the uncomfortable truth is we are not really doing what we are expected to do - help CEOs improve their cans flow, profit and business value.
CEOs are desperate for help on finances. They come to you, the finance professional, for answers on money matters. They seek help about how to improve their financial situation. Are you able to help them?
Here we are going to show you a simple process you could follow to help CEOs improve their financial situation.
What matters to CEOs should matter to you
The first force that truly controls a business is cash flow. Most people have no idea of the full potential of their business to make money. Only if they start paying attention and seek to truly understand their business, its potential and limitations, they will know what’s possible.
CEOs leave the finance “stuff” to the finance experts. Yet, finance is what they are concerned about most.
Simple process for cash flow improvement
We have been focusing on cash flow improvement for over 13 years. And we have been able to discover a number of ways to boost both cash and profit. Below is the most simple way of generating quick wins for long lasting effect:
#1 Discovery (analysis)
We think that businesses (and finance professionals) are terrible at cash flow analytics - they either do not know much about it or do not use them at all. And finance software is terrible at analytics too. So there is a big blind spot here.
Cash flow analytics is an interesting thing, they reveal the full potential, but also the gaps in a business. So people become overwhelmed when they use analytics – they get access to information they are not ready to process yet. They don’t know where to start.
I think a lot of people confuse data with analytics. Analytics is being able to figure out what’s the relationship between those two or three or four metrics. And how we are going to, ultimately, improve it without guessing. And that’s what analytics is, basically removes that blind guessing. But when we have all of these numbers, it can become a little bit overwhelming.
So to overcome this, the report generated with our Cash Flow and Business Value boost tool has summary sections to help you figure out the solutions and what to do next. You can choose what section you share with your client and what you keep to yourself.
Practice makes it perfect. Test your understanding of how to use the Cash Flow and Business Value tool by applying it on at least 3 businesses. Make sure you understand all key financial information extracted by this tool. Familiarise yourself with all terms and what they really mean, how they apply to the businesses you are analysing.
Ability to interpret the results is a true reflection of your competence as a finance professional. In the report generated by our Cash Flow and Business Value boost tool we have given you glossary of terms to help you with interpretation, but it is up to you how you correlate one information to another and what you make out of it.
You can get really creative in this step of the process.
You can use the graphics in the report to convey the key messages to a business; you can adjust the breadth and depth of information to communicate to suit your audience.
#4 Improvement Initiatives
Pick 2-3 areas to work on. Introducing too many priorities can be overwhelming for anybody, especially if some areas are more sensitive than others. And when you are trying to fix things you need to focus everybody’s attention for best results.
Prioritise based on the gaps you and your client would want to close first. Our advice is to go for quick wins with long term effect. You can use the Cash Flow and Business Value boost to identify what areas of the business make most money.
#5 Progress tracking
I think part of the problem is strategy. CEOs spend a lot of time on strategy, but spend zero time on measuring the progress.
So you could provide greater value for CEOs by measuring the money making progress for them. Look at it this way, if the focus of a business is to make as much money as possible, adding analytics to cash flow should be a number one objective.
Otherwise how would they fully understand if the improvement initiatives are giving the expected returns?
We recommend producing Cash Flow and Business Value reports every quarter for businesses growing organically. Monthly reports are more suitable for businesses growing fast. The Cash Flow and Business Value boost tool will help you produce these reports in less than 6 minutes.