Tag: Cash Flow Management
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[Monthly Metric] Tracking Collections with DSO
Metric of the Month: DSO “The first rule is that a measurement, any measurement, is better than none.” — Andy Grove This will be a new monthly series as part of our regular newsletter. There are too many financial metrics and most articles are long on definition, short on “what do I do with this?”…
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A (Financial) Tale of Horror
The Curse of Growth “Control your own destiny or someone else will.” — Jack Welch Hope everyone had a Happy Halloween; in that spirit, how about a tale of horror? Imagine we’re running a business together (let’s say it’s a cleaning business) and we have ambitions for rapid growth over the next few years. Starting…
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Try Using This Underrated Financial Metric
Nice Assets “The goal is not to grow bigger; the goal is to grow better.” — Peter Drucker What’s your favorite underrated financial metric? (seriously, reply and let me know) Mine is the asset turnover ratio (total sales divided by total assets), and I finally came across a great example of it in the wild: fast-casual restaurant chain,…
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About to run out of cash? Here’s what to do
Most businesses fall into 3 buckets: Let’s start with a brief “playbook” on managing a tight cash situation in an attempt to move from the first bucket to the 2nd bucket: Many of these are straight out of the turnaround playbook with an emphasis on short-term cash management. These tactics are best suited for struggling…
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Avoid Cash Crunches with a 13-Week Cash Flow Forecast
Let’s take a look at one of the most useful tools in all of small business (actually, businesses of any size should be using this). Imagine a financial roadmap for the next three months. That’s what a 13-week cash flow forecast is. It’s a simple tool to predict your business’s incoming and outgoing cash over…
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Understanding Labor Costs
Looking at Labor Dollars Some common things I’ve heard when it comes to managing the financial side of labor costs: Most of these are anecdotes, and that’s how I see most companies running their business from a labor cost standpoint. We’re hosting a webinar for members next week covering labor efficiency (save your spot below). So consider…
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Building a Financial Review Routine
What’s your financial cadence? Business owners have a typical financial review process that goes something like this: Financial statement analysis is the primary tool when it comes to evaluating business performance (I’ve said this before). There’s a “what” component and a “when” component to that analysis; here’s a simple routine that should work for most…
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Capex 101 — Investing for Growth
How well do you understand the concept of depreciation and capital expenditures (capex)? Can you relate it to your own business or another business owner? It’s a tough one even for seasoned finance pros. This is the best explanation of capex I’ve ever come across (book revealed later): What is capex? Capex is money you…
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Top 3 Cash Flow Tactics
How do you define success in your business? To me, it means the ability to take consistent cash distributions from a company. 1) Repurposing prices This tactic could work for both inventory and service based companies. Get creative on pricing. Instead of taking your slow moving inventory and deeply discounting it by 40-50% off, try…
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How to Keep Cash Flowing
1) The indirect method of cash reporting The indirect method of reporting cash flow is what you’ll see most often. It’s the standard format across QuickBooks, other financial software, and for publicly-traded companies. How it works There are 3 sections of cash flow With all the components laid out, it’s easy to see why profit is so…