S11 E9-12 TurboCharge Your Business Cash Flow Planning with Patty Lawrence

S11 E9-12 TurboCharge Your Business - 13 Weeks to Financial Literacy
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Welcome to TurboCharge Your Business, a show for business owners who are tired of just working IN the nuts and bolts of their businesses and ready to work ON the business itself from a big-picture, growth-oriented, strategic perspective. 

I’m Patty Lawrence: founder of TurboExecs, money finder, consulting CFO, and right hand to growth-minded CEO’s. This season is called 13 Weeks to Financial Literacy and over the course of the season, I’m teaching you everything you need to know to take your business from confused and chaotic to strategically growing with you in the driver’s seat. Before we get into this episode, you can reach me at turboexecs.com. 

CASH FLOW PLANNING

Cash flow planning is a subset of business planning, the overall umbrella of business planning. Business planning consists of the planning activities that guide the success and direction of your organization. Cash flow planning is a subset of business planning: planning the fuel for your business.

Cash is the fuel for your business and it allows your business to go more places. The more cash you have, the more options and opportunities you have for expansion. So I say: pile it high and deep. That way, you'll be able to take advantage of any and all opportunities that make sense for your business that may present themselves. 

There’s a famous saying “revenue is vanity, profit is sanity, and cash is king.” We always need to remember that cash is the most important thing for small to mid-sized businesses. Why? It allows us to do more, pay our people, expand the business, elevate our impact, and deliver on our strategic mission and purpose. Fulfillment of the business mission has a positive impact on your business, employees, clients, and community. They’re concentric circles that radiate out for the impact you can have on not only your slice of your business and you but all the people and all the different entities that depend on you. 

So, cash is king. Let’s dive into how to get and retain more of it.

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S11 E9 Cash Flow Planning: Strategy
Cash flow planning requires some strategy, and it’s all captured in the cash conversion cycle pictured below.

We can look at the cash conversion cycle in terms of: when does $1 of cash outlaid for your output come back to your bank account as collected from your client or customer? The cash conversion cycle is a measure of how long it takes from your first dollar out relative to your product or service to your dollars in. 

There are a few different aspects encompassed in the cash conversion cycle:

• The sales cycle. How long does it take you to sell and deliver a product or service once you start the clock ticking? If you have a product, you have to make it. If you have a service, you have to fulfill that service.
  
• The production and inventory cycle. This includes physical goods you make or need to source. 
  
• The delivery cycle. Are you performing a service for a client, or warehousing product and need to deliver it?
  
• The billing and payment cycle. Once you’ve fulfilled your revenue promise, you’re now billing the client and getting paid. 
  

That entire timeline is a number of days. What you want to do is shorten any of those cycles to bring money back into your organization more quickly. Then, you can reinvest that money back into the business. That’s the fuel for growth. 

Strategies could include: 

• Shortening times at any point in the cycle
  
• Eliminating mistakes (which cause delays in payments and deliveries)
  

This leads to better cash management and increased cash balances so you can use the cash more quickly to fuel your growth.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping

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S11 E10 Cash Flow Planning: Hidden Cash
What kind of cash is hidden in your business?

They call me the money finder for a reason: because I locate the money hiding within your business that you didn’t know you had.

That could look like:

• Freeing money tied up in old inventory. 
  
• Lowering your level of accounts receivable by changing your terms or how you get paid by customers. 
  
• Looking at waste. For example, maybe you’re a service business and you have to go back to your customer to redo things that weren’t done right the first time. How can we eliminate that waste by doing it right the first time? Checklists, better training, or other strategies might work.
  

Once we free up those kinds of hidden cash in your business, those balances become available to fuel the growth of your company, an investment, or an acquisition. The point is: you have many more choices.
 
Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping



S11 E11 Cash Flow Planning: Techniques
Cash flow management techniques are the tactical execution of your strategy. These are techniques you can use to improve your cash flow, like:

• Shortening cash cycles to get money back into your accounts faster 
  
• Fixing leaky buckets - the areas where you’re spending way more cash than you need to
  

Fixing leaky buckets could look like:

• Accelerating collection of accounts receivable.
  
• Stretching accounts payable (especially if your business has grown and you’re purchasing more with a vendor, you could ask for better payment terms like net 30 instead of net 10).
  
• Cost cutting wherever you’re spending more than you should.
  
• Regular cash flow monitoring to understand where you’re cash flow positive, where you’re spending too much, and where you could be hemorrhaging cash.
  
• Using banking services and upgrading with technology. Fintech used to be expensive, but now if you’re not leveraging some of those platforms you might want to change services to get better insight and clearer cash flow management in your business.
  

 
Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping

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​S11 E12 Cash Flow Planning: Rolling 13-Week Projections
The rolling 13-week projection is an actual tool I use with clients (and bankers love it, too). It’s an operating cash forecast or projection, and it’s a simple way to understand what a quarter is looking like in terms of cash flow.

Typically, we look at this when we’re looking to either cut costs or identify all of the different areas cash is flowing out as well as in. We keep rolling the projection to understand the ins and outs of our cash and discover any surprises we might not be aware of. 

Understanding the cycles of your cash including when you have heavier inflows and outflows and inflows is critical to your business. By knowing your business’ flow, you have better awareness of what’s going on in your business, what the demands are within the business, and what’s coming in from customers. 

And if you’re going to a bank for a SBA loan or other loan, they want to understand your cash flow! Being able to present this projection is super helpful.  
 
Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping

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​TurboCharge Your Business is a show for business owners who are tired of just working IN the nuts and bolts of their businesses and ready to work ON the business itself from a big-picture, growth-oriented, strategic perspective.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

Patty Lawrence is a money finder, consulting CFO, right hand to growth-minded CEOs, and founder of TurboExecs. At TurboExecs, she works with $2M+ professional services and non-profit organizations that struggle to get the timely & accurate financial reports they need to function, often because one person holds this information hostage or lacks the skills required to do the work.

Through outsourced accounting and CFO services, she and her team reveal the story behind the numbers so leaders confidently can make data-driven decisions that allow them to leap forward, trusting they have the team and finances in place for manageable, profitable growth. As a result, TurboExecs’ clients typically increase the bottom line by at least 15% and feel in full control of their finances and results.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

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