The 3 Golden Nuggets of Exceptional Cash Flow Management

Golden NuggetsParamount to the success of your business is effectively managing its cash. Extracted from numerous discussions about cash flow management techniques, here are three takeaways that are key to becoming an expert cash manager.

#1: Develop the Top Five Traits of Expert Cash Managers. First, be realistic about your sales forecasts. We all tend to forecast high – optimism is a characteristic of many great entrepreneurs! But what does a realistic forecast look like?  The challenge of accurately measuring time frames for new programs and revenue generation can make it difficult to formulate an accurate forecast. Having an outside, unbiased third party review your forecasts with you can help synchronize expenditure of budgeted items with incoming cash. Read about the remaining four traits.

#2 Transform Your Finance and Accounting Departments into Profit Centers. Optimize the effectiveness of your finance and accounting departments by redefining your reporting expectations. You must ensure that the reports you receive can be translated into the data you need to make timely decisions. For example, financial statements should clearly show variances and include a Statement of Cash Flows. Then hone your skill at reading, analyzing and interpreting these financial statements and learn how to translate this knowledge into profit! Read more about how to orchestrate an accounting profit center.

#3 Prepare a Cash Flow Forecast. There are many reasons that business owners don’t prepare cash flow forecasts. The number one reason however is that a valid forecast requires a great deal of input from a variety of people in your organization. This process is very different from simply “keeping the books.” Identifying all the ways that cash flows into and out of your business is a critical step in this process. Sources of cash include sales, deposits and collections, among others. Another critical element is a sales forecast review (mentioned in the first golden nugget) and a determination of how and when the sale is converted to cash. Read more about how to prepare a cash flow forecast.

While these golden nuggets are invaluable to a business owner in theory, they are useless unless they are put into practice. It’s understandable that a business owner may feel overwhelmed when faced with managing cash flow – there are simply so many moving parts that the process can seem insurmountable.

Perhaps it’s finally time to get a handle on your company’s financial well-being! Visit this informational page to learn more about how to get started!

Rick Arthur

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Rick Arthur is a CFO whose expertise is built on Financial Intelligence and 35 years in senior financial roles. Coupled with a CEO’s perspective and the experience of building his own $20 million company, he brings a unique depth of insight into business from the top down. Wired to get to know people, Rick works hand-in-hand with business owners of intentional, growth-oriented companies, solidifying relationships as a trusted advisor and confidant to his clients. He leverages his experience to help business owners gain traction and stay laser-focused on the company’s vision, cash flow, and profitability – all while creating big picture solutions for strategic planning, growth and sustainable success.