What is Cash Flow Management – CFM
When you have cash or in any way funds available you can steer your business in the direction you want. Cash shortage either because of general
economic downturns or due to bad CFM practices or lack of any systematic CFM practices, stops the engine and then you are stuck with non-value adding assets and the cost of maintaining. Good management practices and indeed the legal framework dictate that business owners / directors make sure that at any time they have enough cash to sustain their position in the market.
CFM helps prudent organisations make sure that they have enough funds at any time to run their business in the direction they want to go, AS IN, managing their working capital requirements and development plans, let alone creating wealth for all the investors.
It provides ease of mind enabling the process of decision making for the future rather than spending unnecessary and non-productive time in worrying about survival.
Summing it up, cash flow management is the secret of success and not just an emergency button the use of which is not to be found in any “business as usual” manual. Cash flow management is not an accounting exercise for a business in distress, but it is a “corporate tool” for good and bad times. It can save “lives”.
The Benefits
CFM can only be effective if it is a systematic and interactive business process and it requires the complete commitment of Management. It should not be done remotely by someone within or outside the organisation. It is an all business responsibility encompassing all activities putting together the internal dependencies and interdependencies.
CFM should capture the present situation, commitments and expectations, in numbers. Moreover, CFM should be a precise picture of key business drivers and their importance. CFM is a diligent exercise by a team in understanding the situation and translating the future in numbers. It should be a task covering long term business objectives.
In times of distress, CFM is a tool to help a business in distress to overcome “short term” challenges (13-week cash flow). It is done in sufficient detail to help decision makers take informed decisions that may take them to greener pastures.
How we can help you?
Having worked with hundreds of organisations we understand the opportunities and challenges. Our priority will be to help you overcome the fear of getting out of your business as usual and it is not my fault mode so what can I do? Mode in other words escape from your comfort zone. We can help you rock the boat
We have the methodologies and tools to help you:
- Involve your people – make sure accountability is loud and clear
- Assess objectively the situation – Decide the starting point.
- Understand and accept that short term – survival decisions – are not always in line with long term growth strategies
- Identify your market value adding elements – your key business drivers
- Which are the business environment parameters affecting your business – can you get rid of them?
- Understand internal and external dependabilities & interdependabilities
- How do key market players affect your business? Do you know them/ do you work with them?
- Understand your working capital needs
- Put your numbers in perspective, identify alternatives
- Understand the picture
- Set priorities and decide on the timeline for implementing actions
