”现金流的十大真相“沙盘体验活动

Profits aren’t cash.
The best way to manage your cash is through 2 numbers:
1. Operating Cash Flow
2. Free Cash Flow
If your operating cash flow or free cash flow is negative, that means you’re using cash from other areas:

1. Previous cash balance
2. Generating cash from financing activities 3. Generating cash from investing activities

Cash reserves are your lifeline. 
A simple rule to follow is to look at the following:
1. Average 3-6 month payroll cost
2. Cash burn during slow months
3. Cost of unexpected events in production or service cycle
Comparing these 3 numbers will get you a range of cash needs. The goal is two parts: sustain operations during a regular business downturn and give yourself time to make wise decisions during a catastrophic downturn.

Your bank balance doesn’t reflect your obligations.
Instead of looking at your bank balance, review the data in the following reports:
1. Bank Trial Balance (accounting balance that includes payment commit- ments)

2. Accounts Receivable Balance & Aging 3. Accounts Payable Balance & Aging

Invoicing quickly increases your chance to get paid
Being proactive with receivables makes it way more likely you’ll get paid. Follow these 3 rules when it comes to invoicing and receivables:
1. If you can sell cash, sell cash.
2. Invoice as promptly as it is possible to do accurately.

3. Create a process to collect the money as quickly as you can.

You don’t have to pay when you get the bill

Adapt a pay-when-paid model for your subcontractors if suitable.
For all else, understand their payment terms and your cash flow, then pay when optimal based on both. Sometimes that can mean paying 30 days or two months after receiving the bill, other that could be 180 days plus.

Take inventory management seriously

In managing inventory, consider:
1. A just-in-time inventory system to reduce holding cost and waste.
2. Using forecasting tools to predict demand and necessary stock.
3. Regularly reviewing and adjusting inventory based on sales, trends, and market conditions.

Growth eats cash.

A few ways to manage growth well:
1. Get credit facilities before you need them; this will help fill the lulls in cash.
2. Use scenario planning to test how various growth rates could impact your cash position. Being surprised gives you less options than if you planned ahead. 3. Revisit your Cash-to-cash Cycle and collect faster while paying later.

Don’t forget taxes

A few things you can do to manage your taxes:
1. Develop a strong connection with your tax officers who understand your business and know the policies.
2. Meet quarterly with your tax officers to plan your taxes and tax payments.
3. Before making big investments or changes, talk to your tax officers about the tax implications. It should be a part of your calculation, but never the only calculation. 

Use leverage but sparingly

When managing leverage, consider:
1. Establishing clear criteria for when and how to use debt. Focus on using debt to fund growth, reinvestment, and new initiatives.
2. Regularly review leverage ratios and cost of debt in conjunction with cash flow.
3. Build more than one banking relationship and speak openly with them. This will allow you to better understand the landscape and have options when you need help. Better to negotiate with a relationship than without one.

Flexibility is your friend.
1. Be flexible and adaptable in planning.

2. Use more than one supplier so you’re not exposed to supply chain issues.
3. Keep cash reserves.
4. Slightly overstaff, or cross-train employees, so you’re not as exposed to employees being out or quitting.
5. Allow employees to be a part of strategic discussions and TRULY offer feed- back (which will improve your plans).