Posts by Dave Cain, CPA:
- A cash flow projection will provide you with the information you need to make better, more lucrative decisions. For example, if you had insight into which of your company’s non-core assets are viable would you make changes to support future growth or would you simply maintain the status quo? With a well-maintained cash flow projection at your fingertips you can make decisions that will help secure a more lucrative future for your company.
- If you’re looking for a way to hold you and your team accountable for the company’s success and failures, look no further than your cash flow model. This tool can help you fine-tune your management strategy, which can help you and your team achieve better quality standards, increased production, enhanced efficiency and an improved reaction time.
- Your cash flow strategies can empower your team to take further ownership of their work and pride in the company. When they have a chance to see that their actions influence how well the business does as a whole they will be more likely to seek out opportunities for improvement.
- When you have a cash flow projection then you have the tool needed to develop timely and attainable goals. When you have a better idea as to how much money is going out and coming in (and why), you and your management team can put plans in place to better manage the company’s cash flow in a more favorable way.
- Are you managing cash that you acquired from an external source? Will you manage acquired cash in the future? Stakeholders love cash flow projections because they provide them with the information they need to monitor their investment. Oftentimes banks require you to provide quarterly financial information to prove that you’re complying with the terms of the loan package.
- Customer Metrics: How many new customers have you acquired over the last six months? How many customers have you lost? What is the average profit margin for each customer?
- Cash Flow Metrics: These metrics should be designed to measure the company’s ability to meet obligations as they come due. For example: Is your inventory turning? How old are your accounts receivable?
- Sales Metrics: A company should have sales metrics to measure sales and whether the sales are satisfactory for the company.
- Employee Metrics: These metrics could be designed to measure how effectively the company is hiring and managing its employees.
- Borrowing Metrics: This metric will measure how the company is effectively managing its debt.
- You regularly bounce checks.
- You don’t have immediate access to financial information when your banker asks for it.
- Your budget and forecasting is lacking.
- As an owner, you have your hands in too many things to focus properly on your finances.
- You can’t answer the question, “How much money did you make yesterday?”
Is Your Cash Flow Ready For Spring?
February 17th, 2015
Cash flow is arguably more important to your company’s success than your bottom line because it takes your past, present and future projections into consideration to arrive at a comprehensive analysis of your financial wellness.
Spring is the season of renewal. It’s the time of year when we emerge from our dens to enjoy warmer weather, the melting of snow and an abundance of greenery as nature appears to come alive. Spring is also an opportune time in the business world. And before we lose ourselves in the hustle and bustle of increased production and revamped initiatives, take this time to review and solidify your company’s cash flow projection.
Managing your cash flow now will help minimize mistakes later – when business and economic trends become more favorable. Still not convinced? Here are five more reasons to consider maintaining your company’s cash flow projection.
5 Reasons Why Managing A Solid Cash Flow Is Just Good Business Sense
Cash flow is arguably more important to your company’s success than your bottom line because it takes your past, present and future projections into consideration to arrive at a compressive analysis of your financial wellness. Email Rea & Associates to learn more about the importance of cash flow projections and how you can use yours as a valuable management tool.
By Dave Cain, CPA (Dublin office)
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Do Your Business Metrics Need an Oil Change?
May 23rd, 2014Did you ever notice that little sticker in the upper left-hand corner of your windshield? The one that informs you your next service date for changing the oil and tire rotation. As you fire up the ignition, the fuel gauge is activated and the miles per gallon information is displayed. The on-board computer lets you know that the headlights are in the automatic position and the tires are properly inflated. The navigation system may even provide a weather update or a construction delay on the interstate. Within a matter of seconds of entering your vehicle, you have virtually all of the important metrics for your upcoming road trip.
Your business metrics and performance indicators should be as easy as locating your vehicle’s metrics. The metrics need to be meaningful to you and your team and used as a decision making tool in the day-to-day operations of the business. Many business owners and managers use daily and quarterly metrics more frequently than the monthly financial statements to run the day to day operations.
Business Metrics To Consider
Your business’s on-board computer can churn metric after metric and ratio after ratio. However, the quality of the metrics is far more important than the quantity. One recommendation is to identify four to six ratios that are unique to your business and industry and continue to study the trends on a daily or weekly basis. As a general rule, every business should consider metrics in the following areas:
Once the metrics have been determined than a “windshield sticker” or dashboard can be affixed to your technology devices and reviewed by the management team on a regular basis. In addition, an industry scorecard can be developed to measure how the business compares to the industry.
Just like the oil in a car, the business metrics will need to be changed or enhanced on a regular basis to reflect changes in the economy and the business cycle.
Safe travels and be on the look-out for orange construction barrels and detours. Check your metrics!
Business Metrics Help
If you need help determine which business metrics are right for your business, contact Rea & Associates. Our team of Ohio business consultants can help you determine which business metrics are needed for the success and growth of your business.
Author: Dave Cain, CPA (Dublin office)
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Do you have trouble remembering people’s names?
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