Cash Flow Discussion

If you could only do one thing to improve cash flow, what would it be?

Improve the average collection period

Jose Zulmar-Gerente Financeiro //Finance Manager// CFO
Gerente Financeiro// Finance Manager // CFO // Diretor
Top Contributor
Roy,
There’s no magic formula: sell more and well

The faster a seller moves goods to a buyer, the faster the buyer will pay for those goods, and that impacts cash flow. Therefore, businesses must ask themselves how they can better improve the speed at which their goods exchange hands. And this goes well beyond the actual transportation of the goods. Rather, it requires an examination of the entire process–from sales all the way through invoicing.

Pierre C. Miron, Company management and Financing
Roy,
I believe that both comments from Mrs. Foteini and Mr. Zulmar Lopez, are very accurate. It all depends on how fast you need to improve your cash flow. On a short term push collection and stretch payables. If it is a mid-term issue Mr. Zulmar Lopes’s solution should be put in place. And I would recommend in the examination process to look at the turn around time of your inventory. Do you need all that inventory on shelves?

Seraphim Tsoutsos, Consultant- Looking for new opportunities
I’d check (trend) my CA indices as well as the debt burden each CA item carries (currently). Then it’d be obvious where to focus

AJ Minnetian, Senior Director – Technology Finance l Strategy l Accounting l Business Development Professional
The classic way to do it in the near term is to stretch the balance sheet, lengthen your AP days, and shorten your AR days. Easier said than done!
Obviously, this will only have a short term effect, you ultimately want to increase your net income by improving revenues, less so lowering costs.

Jim Smith, CEO, Enterprise Management Group | Enterprise-Wide Expense Reduction | Profit Improvement |
Reduce operating expenses in a sane and employee involved process. It is not possible for a company to not have needless costs. Things get initiated for one valid reason or another then go on auto-pilot, become part of the culture and no one bothers looking at it again. If they do, it’s usually part of a bigger enterprise wide initiative and everyone, to be fair, gets the same objective, the same percent.

That makes absolutely no sense, but it is the most frequent approach. What happens when a CEO takes this approach, high-value departments get penalized with, the say a10% cut, while low-value departments are rewarded with being allowed to keep 90%, all in the name of fairness.

Sometime ago I averaged the net margin of the ten largest Fortune companies. It was 6%. So if you’re trying to impact cash flow, it takes $17 of incremental sales to drive $1 to the bottom line and $1 of expense reduction to drive $1 do the bottom line. Seems pretty obvious if you can do it.

We typically generate a sustainable 10% SG&A reduction, regardless of what has occurred just prior and the percentages per department are all over the scale. One hundred percent of the savings are the result of employee input occurring as soon as we have suspended the company’s culture, politics and silos and it’s all done in ten weeks. One example: a sustainable $300 million SG&A reduction, a $200 million reduction to already approved capita and a one-time inventory reduction of $45 million. All in ten weeks.

Go for the expense reduction, which will occur far quicker than any revenue ramp up.

Alex C. Leung, CPA, CA, Performance Management Professional
A company’s industry and business environment / competitive landscape dictate what options are available to increase cash flows. That said, dare I potentially bare the wrath of a frenzy of thumbs down and suggest:

Pay AP sooner to take advantage of supplier discounts were offered for early payment. Real cash flows potentially gained real cost savings, and happier suppliers who can help you make happier customers and potentially faster cash receipts.

Jose Zulmar-Gerente Financeiro //Finance Manager// CFO Gerente Financeiro// Finance Manager // CFO // Director
Top Contributor
I’d would add.

If improving cash flow is a priority, make sure all of your employees understand that. Remember that your employees will be motivated by the targets you set for them.

Obviously, collectors should have collection targets. But even your sales staff should be on board. If a salesperson only has a revenue goal, he or she will work to meet it, regardless of whether the invoices are paid on time or in full. Instead, institute a policy where, if something is written off, the revenue is backed out of commissions.

If employees have a target, that’s what they focus on,

Bob Raffo, Jr. CFO at PSKW
If I were to focus on one thing only it would be the quality of my customer. Everything else is a short term solution. Make sure your customers are creditworthy – timely payers – financially secure. That is a long term strategy for positive cash flow.

Jose Zulmar-Gerente Financeiro //Finance Manager// CFO Gerente Financeiro// Finance Manager // CFO // Director
Top Contributor
Your most important customers are not those that generate the most revenue but those that can unlock the most value in your business

Jose Aristondo Maruri, Director Financiero Subdirector General
Excellence in debt collection

Bill Milewski, Global CFO / Finance Director – Relocating to Washington, DC
Top Contributor
Debt issues begin BEFORE anything is sold. It’s a 360 view of managing your business.

Sr Manager Group Finance at ARASCO
Roy,
My advice is to create a product within your product mix that is sold on a cash basis only. The revenue streams from this product would provide great cash flow to finance other products that your company sells on a credit basis.

Fidelis Muia, Director of Financial Operations
Top Contributor
I will be glad to get your views on how to improve cash flows from a not for profit point of view.

Ammar Khadim, Chief Financial Officer at WMO
An interesting discussion as, in most cases, the main reason for business failure is poor cash flow management. In the short term, simply try to reduce receivable days and increase payable days.

Fidelis Muia, Director of Financial Operations
Top Contributor
Analyze which of these two components (receivables and payables) mostly affect your cash flow.

Roy Austin, CPA, CMA, MBA, Business Coach & Trainer for Sustainable Success | Purchasing Solutions | LION | 1800+ Contacts | [email protected]
Top Contributor
Thanks to all of you for your responses. Now let me rephrase the question. Long Term, what is the most important thing a small business owner could do to improve cash flow.

Howard Mulcahey, Vice President and Chief Operating Officer at Forensic Economics, Inc.
Excellence in the revenue cycle: solid sales with the expectation of prompt payment; lots of attention to the sale until and after it is paid; effective collections; stretching AP but stretching expectations during procurement; and making all of that part of that daily operating mindset. No small task.

Lee McLendon, CPA, CGMA, CFO
Fidelis Muia requested suggestions from not for profit view. I have been in both environments and there really is no difference. You still have to manage costs, collect accounts, and manage payables. Because of the focus on the bottom line, the level of intensity of the issues may be lessened in the not for profit environment but the principles remain the same.

Thomas Della Franco, Chief Financial Officer
Most beneficial, long term impact always involves inventory management and turns reductions, together with laser focus reduction of E&O balances. Unfortunately, this is also a difficult area to yield immediate results. The real skill is in developing optimal stock levels and turns to satisfy demand, while understanding and focused management of historic root causes of E&O.

Janine Meira S. Koppe Eiriz, Finance Manager – FP&A, Treasury and Finance Project Management at Cameron
I learned from experience that it is good to make everyone aware of how they are affected and can influence cash flow generation – and in communicating with all the enterprise we cannot be restricted to our finance jargon with terms that are so far away from everyone else’s day-to-day work in operations, sales, HR, IT…each employee has their share and they should know what it is in their own “language”… While having someone trying to grasp the DSO concept in a chart I had a quick turnaround by saying: this is how long it takes us to get the cash in our pocket to reward everyone’s effort… he smiled and ever since became a great contributor to improve collections!

Kumar M, Intern at Varma & Varma, Chartered Accountants

Short Term Plan:
(a) Reduce the AR period. Negotiate and re-negotiate with the debtors that may go bad to recover as much as possible.
(b) Optimize the payments to creditors so that you retain their confidence.
(c) Offer discounts on non-moving goods.
(d) Strict control on Inventory replenishment and reorder with respect to Quantity and Time

Long Term Plan:
(a) Emphasis on the Cash Conversion Cycle.
(b) Redesign the processes to eliminate non-value adding activities.
(c) Focus on new products and new markets to generate revenue. Targeting markets similar to the existing markets would have an advantage on the cost front.
(d) Review of purchase processes and Sources.

Note: The question asks to mention only one thing. But, I mentioned quite few things here. I am sure most of you would agree with me if I say, they are interrelated and the action to be taken depends on the type of industry/environment that the company is operating in.

Jeremy Slaughter, Client Partner and Principal at Tikvah Group
There are a lot of great things listed in these posts and all can help cash flow in some scenario. I think it might be challenging to assume all businesses can improve cash flow by doing the same “one” thing. I work with a company that produces revenue in the neighborhood of $50M/yr and they have no receivables, no inventory, and no products of their own to sell. While all the actions listed above are absolutely capable of improving cash flow this company isn’t impacted by them. Their best controllable expense is labor and travel as they are a rep agency for other companies and their revenue mix is most impacted by the terms of each manufacturer and the markets in which they represent companies. I mention this not as the “one” way, but to say every company at any given time can be different so diligence and awareness are imperative in determining the best action each company can take to improve their respective cash flow.

Roy Austin, CPA, CMA, MBA, Business Coach & Trainer for Sustainable Success | Purchasing Solutions | LION | 1800+ Contacts | [email protected]
Top Contributor
Let me shift gears a little. For small businesses, what are the most important things they can do to improve cash flow. While the basics of cash flow improvement are universal the dynamics and resources of small businesses are different than for large companies.

Bob Raffo, Jr., CFO at PSKW
A small business needs to do the following:

1. Develop reliable and accurate financial statements – not a 10K but at least a P&L, Balance Sheet, and Margin Analysis. Produce these reports monthly and manage the business by the numbers.
2. Establish a line of credit – no matter how small. Use it and build it and make sure you have access to funds to help support growth.
3. Understand ROI – if you are going to spend money on advertising – how will it drive revenue. If you are going to buy equipment – how will it lower your costs to improve margin – etc.
4. Most importantly – Sell. Sell. Sell.

David Zaleski, Chief Financial Officer
I think it all starts with education – educate all employees on cash flow importance and then let your entire company help with ideas. Integrate it into the culture, the company metrics, the bonus plan, etc. Make it everyone’s business, keeping it out in front and it will develop quickly. But you as CFO must walk the talk and be visible in the process and just as importantly, you must get the CEO on board.

Mark McLaren, Innovative Financial Consultant
Build or provide a top-quality product and support it. There are very few businesses that do this to any significant degree anymore, but when it is done, it provides a long tail of profitability and cash flow. Too much energy is wasted on beefing up short term CF.

Costco is an excellent example of this. Wall Street always pushed for higher margins from Costco, but Costco pushed back. Costco is much more profitable because they operate this way. Happy customers produce repeat sales which, in turn, bolsters long term CF’s. Cable companies’ major focus is ST CF. How satisfied are their customers?

While I am an accounting and finance person, you never want the cart before the horse!

Robert S Meybohm, Results-Driven Executive
I must not understand the question? If you want to deal with cash flow over a long period of time take a look at the cash flow statement and see what the largest positive numbers are on the statement; likewise look at the negative numbers. What can you do to make the positives go bigger? Seems to me, the answer is typically tied into running a larger organization (sales growth ), while not experiencing leakage in profits or efficiency (i.e, DSO, inv turnover ratios)

Ronald Raadsen, M.B.A., Accountant | Consultant | Looking For New Opportunities
If there is only one thing, then it is a complete understanding of the cash flow cycle of the organization. It is understanding where the money is going, where it is coming from, all the internal controls to safeguard cash, how quickly customers are paying their debts, the time frame for paying invoices.

There is an inherent with the premise of discussion, there are too many factors that can suddenly explode to cause a hemorrhage. It’s like a doctor during a physical, he looks at everything.

Abhishek Choudhary CPA (USA), CA(I)
Corporate Controller: Financial & Accounting Management, Budget, Debt & Project Funding, Restructuring, Tax Planning
Cash flow improvement efforts could be an industry-specific or specific to a particular organization. Though there are general points to focus,

a. Understand clearly Cash flow items (both Inflows and outflows), as only those items will be the players

b. A simple approach has been to reduce deferred collection, and rather offer reasonable discount for the cash transactions, as anyway external borrowing cost is normally higher than these discount; and these discount could be offer as marketing promotion to serve dual objectives

c. A cash reserve helps in several respect, e.g. Grabbing a cash deal, M&A, Stock prices, Attracting better human resources

d. At the same time, Cash outflows management can also contribute in improving Cash flow, e.g. Corporate account with Vendors, Longer terms (60-90 days) with bulk orders, Terms negotiation/renegotiation

e. CAPEX can be a major item in Cash flow, and this outflow could be reduced by opting other alternatives such as Capital leasing, Financing, Lease cum buy option or sometime operating lease

f. It is most important than anything else that business is growing, company’s customer retention is good and always focus on new acquisition (customers)

g. Alternatively, these programs could be considered for a specific situations, e.g. Factoring (for over 30 days AR), AP/Merchant financing (in case of cash or lower vendor terms), Private label CC (GE Capital program- in case of repetitive customers), Line of Credit (on AR &/or Inventory)

Joe Kirby, Chief Financial Officer at NorthPoint Health & Wellness Center
We run human services nonprofit and are driven mainly by contracts along with some fee for service revenue. For us, looking at CF over a two year period of time helps us to focus on what we need to accomplish now in order to stabilize CF in the longer term. So, for me, adjusting everyone’s mindset to think more strategically and prepare now for tomorrow is important.

James Wade, Director of Finance
Finance leader who partners with business leaders to deliver ‘the story’ behind the numbers.
If it’s one thing, then it has to be about Revenue. Sales must drive the equation.

Richard Taylor, Controller at Lomax Construction
My “one thing” would be to understand the costs of the products/services being sold are, in fact, sold at a profit.


Kelly Parker, Vice President at R.T. Beers and Company
High company morale. You can build the best product and have superb sales; however, if company morale is low it will lead to high turn-over, employee injury claims, and low productivity. Keep the employees happy, keeps the business viable. How much does it cost to train an employee, an insurance claim, or a large lawsuit? A happy employee can safeguard against those and not put the business assets in jeopardy. Which in turn, leads to long-term cash flow. More coming in-and less going out.

Mark McLaren, Innovative Financial Consultant
Kelly, What you described is the perfect description of the Costco model. Every single time I go to Costco, I find the employees helpful and cheerful. I think you are right. Focusing on the financials first will always be a bad long term solution to LT cash flow. After seeing the deluge of people at Costco, getting the service I liked, and getting high-quality merchandise for a good price (Peter Lynch method), I investigated the financials. Good as well. Additionally, Charlie Munger sits on their board and Charlie is Warren Buffet’s, right-hand man. So… steady as she goes. I bought the stock over the 2008 to 2010 time period. Glad I did!

Javier Egozcue, MBA, CPA, CGMA, Internal Audit Manager
Great question with lots of different possible correct answers! First, we need to narrow a bit…

1) Understand your company costs structure and business cycle.
2) If we are focusing in the operating cash flow, I would focus on keeping sales in a growth mode, keep a close eye on receivables (sales to quality customers = good receivables turnover) (DSO management)
3) Keep a close eye on inventory (inventory management is critical) work to achieve a high inventory turnover. (DIO management)
4) Manage your accounts payable to squeeze as much as you can from your payment terms. (DPO management)

1)+2)+3) = The famous Cash Conversion Cycle

Other key matters are:
Capital expenditures should be monitored very closely (ideally for projects showing positive NPV). Other key ingredients to this recipe are good cost control and good gross margins.

If a company can manage these key areas I would say the LT cash flow will be healthy. Obviously these are general measures that could be applied to a business in almost any industry. Also, this is only the numerical side of the equation… we also need to factor in an important ingredient… employee teamwork, dedication and commitment to succeed from top to bottom.

Mark Wagstaff, Vice President of Finance at Connecticut Lighting Centers
For long term cash flow improvement it essential that a coherent sales strategy needs to be implemented to grow sales within the territories/markets and expand into new markets and/or new product lines. Everything else (cutting expenses, etc.) is short term

Warren Huang, Ph.D. 5500+
Global strategy integration: Big data, economics, capital market, value chain, technology, trade innovation Founder,
Process/product/technology/market innovation increase revenue, profit margin growth and cash flow

Mary M. Bodajlo, Finance Column Editor of an International web at Great New York
Listed imminent “Ali Baba,” Why can produce beautiful results? Its recipe for success. . .
This Chinese electricity supplier giant said Wednesday, June 30 at the end of the quarter, the company’s profits almost tripled, reaching $ 2 billion (about 12.3 billion yuan). Given its total revenue of $ 2.5 billion, indicating profit margin reached a startling 80 percent. With less than a month before its initial public offering, Alibaba Group intends to show just how profitable – why? How? He focused on mobile – simply – to seize the market.

I think, no matter how kind you are big or small business, you still need to understand the market, in order to win the market and your customers’ needs, to set up your merchandise at competitive market, with business, with the guarantee of cash nature .
I use to track and learn how their live around my home the businesses sales – “Customer First, always keep in mind” is a guarantee of success. (I can talk for hours, now consolidated for your reference)

1. Fixed source, (it guarantees you a fixed cash income);
2. Develop new customers, uninterrupted launch prominent cheap merchandising (coping customers to shop around) to boost the marketing of other goods;
3. Employ short-term (1-175 days) temps, found excellent staff left for permanent workers; attention attitude and quality of staff training is an important means to retain regular customers;
4. If the conditions established client accumulation accounts, reward; track market needs and your customer base;
5. Adjusted merchandise, record customer inquiries, and this business does not have the goods to be added; If 3-6 months sell nothing the goods should for special sell on the cost and not to carry.
6. Whether large or small businesses had to adjustment goods’ prices to ensure to keep your business the competitive counterparts;
7. What customers think, the old, the disabled person home delivery plus discounts, access to customers credit and become your obligation salesman;
8. Must have an excellent and hardworking, intelligent market administrator ( or a team) in your business is essential.

Edmund Mabuti
CASH IS KING. I USED TO BE A VP-FINANCE & ADMIN OF ABB PHILIPPINES, AND I CONSIDER ABB AS AN INSTITUTE WITH LOTS OF REGULAR SENIOR MANAGEMENT MEETINGS AND WORKSHOPS ON HOW TO KEEP A HEALTH CASH BOTTOM LINE FOR THE LONG-TERM. AS A CFO, YOU HAVE TO DRIVE THE BEST POSSIBLE WORKING CAPITAL MANAGEMENT AND BE READY WHICH COST COULD BE FREEZED WHEN YOU FORSEE SOMETHING WILL AFFECT YOUR COMPANY’S CASH POSITION.

Mark Spicer, GM Finance | Driving powerful business capabilities | NOW AVAILABLE
Roy, if it has to be one thing, establish and maintain well thought out, well-documented processes. Everything stands (or falls) on them. “well thought out” means effective, efficient, and scalable.

Kok-Poo [KP] LOW, Senior Finance Manager, BDO LLP Group – Singapore
Basically, all matters in business created by human beings so motivating employees working happily with a commitment to the company vision which will in turn lead to long-term cash flow stability & business sustainability.

Jason Wang, Vice President at MDT InfoTech Ltd
Adjust or change the business model is working for your long term cash-flow problem.

Poul Erik Kamstrup, Global Finance Executive
In a B2B context:

1. Know where you want to position yourself in the market.
2. Have a value-adding product/service offering that matches your positioning. Be able to adapt quickly to market requirements.
3. Work on continuously improving the supply chain in close collaboration with customers and suppliers to eliminate waste.
4. The better brand recognition/customer loyalty, the better share of sustainable cash flow your company gets.

Susan Wilson, Director
The most important thing you can do to improve cash flow

Going back to the basics

1. Review your Terms of Business.
2. Re-negotiate credit terms to be extended.
3. Manage your stock levels.

George Habib, Deputy Financial Controller at Azur Travel
The most important thing is the Sales information
Examining the data from the sales staff on a regular basis. How much was sold yesterday, how much will be sold today, and what about tomorrow? The more accurate this information, the tighter the inventory. And the tighter the inventory, the better the cash flow.


Filipe Moura, Assistant Vice President, Financial Services Manager / People’s United Bank
Keep your fixed costs low!

Shafiq Ebrahimjee, Chief Finance Officer
It varies from industry to industry. Cash flow management is linked to customer/creditor support too. The relationship that will exist between yourselves and the creditors will determine how much reasonable time you can obtain in addition to a normal (30/60days) period. This is of course a plus to all the other points mentioned above earlier.

Kirk Abriola, CPA, Senior Finance Professional with Top Secret Clearance Seeking New Opportunities
Execute to your companies strategic plan which includes cash flow expectations. If this does not exist, you may want to start here.

Greg Thorne, C.F.O at Tom Lange Company
Relationships with customers and suppliers are key. When your customers are tight on cash they will generally prioritize available cash amongst their suppliers. You want to make sure that you feature high on, or at the top of that list. The type of service/product you provide obviously influences this but so does having a solid relationship with your customer . Similarly with your own suppliers, good relationships lend themselves to suppliers being more flexible on payment terms to them.

Venkataramanan Thiru
Practicing company secretary at my earlier comment is not appearing

Kelly G. Peters, CPA, CMA, Director, Compliance, Land, and Armaments Sector at BAE Systems
The biggest opportunity for improved cash flow is often inventory. Improving inventory turns, while maintaining days receivables, will often bring significant, long term cash flow benefits to the company. These strategies often require partnering with your suppliers for co-investment in product development and holding inventory on their books, being able to implement JIT, attacking waste, etc.

Another model is selling your supplier’s goods through your web-site, taking a commission on the sales (I believe this is the eBay and Amazon models).

Henrique Pezzutti Ribeiro Teixeira, Financial Market Professional
“Natural Hedge” is the most efficient way to manage your exposures, investing time to balance your AR and AP in the long term.

Adam Ryan, Seeking VP of Finance Role – Global Financial Professional, Turn Around Specialist, Strategic Planning, FP&A
You need to ask some basic questions about your business before you can determine a long term cash flow planning:
1) How much will your sales growth over the next five years and what will affect profit margins
2) How long does it take to collect your outstanding A/R and what could cause collection problems
3) What are the capital expenditures over the next five-plus years
4) How much is the company’s headcount going to change over the period that your planning for on the cash forecast, what are the benefits costs and changes in wages plus bonuses
5) What is the impact of variables, raw materials, delivery, electric, and others
6) The costs of banking like interest, lending cost, and other financing costs
When you have answered these basic points list above then you are in a position to project your cash requirements long term.
All this work can become worthless in a moment if there significant economic changes within a business or the economy.
Long term cash forecasts are good to plan but difficult to control over extended periods.

Brian Awuor, Management Accountant at Mabati Rolling Mills
Hi Roy, in my opinion in the long run cash flow and profitability are one and the same. In order to improve cash flow in the long run a company needs to maximize the efficiency at which it generates revenue from every shilling (dollar/pound/euro/yen/yuan/dinar/etc) invested. Also, the company needs to reduce the payouts it makes that do not have a direct or indirect effect on the inflow of revenue and work on having a reasonable debt appetite.

Florita Benemerito, Business & Finance Manager at Caresharing, Inc.
Improving cash flow Long term-regardless of what type of business you are in-the Dynamics of Cash Flow Management should not rest only with a specified department within the company but rather all the major players of the company should be involved for their COMMITMENT AND their sense of OWNERSHIP(as trusted management of the company). So all the proposed cash flow budgeting controls shall be properly downloaded and implemented company-wide even to the lowest rank. Meaning each major players within the company should have an awareness of the importance of each role for the survival of the company which would translate to continued employment and happiness to both the investors and the employees -as well as its positive effect towards continued business with the external partners-Customers, suppliers, etc. With this scenario, planning and implementing controls for a Long Term Cash Flow management would become easier not only for the CFO/Director in charge but also in getting the approval of the company stakeholder to infuse more investment and looking positively towards a long and positive prosperous business ahead.

Joserico Martinez, Shaklee Mexico
Cash is the result of CAPEX activities in the organization. There is not a formula since this depends on each industry, nevertheless, the good policies will determine the correct way to have a good administration. Remember that: If this Company were my own business, I really would be taking the best decision?

Melissa Miller, Director of Financial Services at Firestone
Being able to capture the data necessary to track and adjust inventory turns, expenses, receivables, etc. is the key to having what any CFO needs to adjust and address areas of concern. Absent sound data we are relying on the only judgment which may or may not be accurate.

Luiz Felipe Mascarenhas, Senior Manager FP&A at World Fuel Services
Good stuff! Another point to be considered is the gap between the sales forecast and real sales. The sales forecast drives a lot of activities in our business, like the diesel supply. We have to pay in advance for selling after. If we don’t sell, it will turn in inventory.

Arturo Carbonell, Senior Finance PRG
Not always easy, however, wherever possible making use of deposit payments. 50% upfront fees, securing prices for customers, especially where volatility exists. There are potentially vast implications as this would not be due until the final invoice is raised, making this more attractive.

Dan Hansen, CPO | Director Group Procurement, Sourcing, Category, contract, Finance, logistic, Tax & IT
Above are all levers – and good levers – but having executed 3 global Cash flow programs, then I learned that the key driver is
TRANSPARENCY: Create insight in where you REALLY are, and where you REALLY are heading
OPERATIONAL COMPLIANCE: It’s all about working on the same agreements and compliance. (Example Using PO does not help, if the PO is not aligned with Commercial contracts).

So the easy and fast view
Short term its (DPO 70% / DSI 20 % / DSO 10 %)
Long term ts (DPO 40% / DSI 40 % / DSO 20 %)
Above is based upon creating more than 15 % improvement on Cashflow in less than 1 year (want to learn more – Mail [email protected])

JELILI ADEWALE ADEYANJU, Group Head of Account at Computer Warehouse Group Plc (CWG)
First, integrate the ideal in all staff. Secondly, encourage advance payment from customers. Thirdly, negotiate a better payment term with the supplier. Lastly, ensure the deal is profitable.

Victor Mamtora

• Financial Controller
• Improving Internal Controls
• Streamlining Processes
• Managing a Finance Department

Pick whichever ONE suits your needs:

• Tighter control over stock with a view to reducing to bare minimum levels.
• Offering credit customers discounts for prompt or cash payment.
• Move loans to cheaper financers if possible.
• Reduce the biggest cost in any business – (salaries) through staff reduction. Stop paying overtime. Automate procedures wherever possible.
• Reduce advertising if you have an established customer base.
• Finally look at your Receipts choose the biggest one and try to think of ways to improve it and then look at your Expenses and think of ways to reduce the biggest one.

Warren Huang, Ph.D 5500+
Global strategy integration: Big data, economics , capital market, value chain, technology, trade innovation Founder,
Process/product/technology/maretk innovation increas profit margin through high value added product upgrade

Retief Ueckermann, Chief Financial Officer at Cape Gate Fence & Wire Works (Pty) Ltd
Teach everybody in the organization the following:
Sale is vanity
profit is sanity
cash is reality

Susan Korath, CCIM, CFO at Tulfra Realty II, LLC
Most important – control and monitor costs. No matter how successful a company may be in increasing its revenue, if its costs are not tightly controlled, then it’s analogous to a pocket with holes.

Dan Hansen, CPO | Director Group Procurement, Sourcing, Category, contract, Finance, logistic, Tax & IT
… Add to my previous input.
Update all Suppliers to Minimum 90 Days (where legally possible)
Request maximum 30 days from Customer (Where the Power game allows)
Implement the Supplier Financing model. Establish the “One Planing” function – across all sites. Ensure a good match btw production material needs and supplier delivery time (there is no need to have 3-10 days stock, if you supplier can deliver in 2-3 Hours (so Adjust you Max/Min control active with your supplier delivery possibility). Implement reversed Supplier planning (Strategic suppliers, have access to your planing – they will be responsible for you have “Just in time” delivery. Monitor payment run (automatic block all early payments). Ensure that your finance system is adjusted to your actual terms (not standard terms). Hire a Cash flow director – give Him/Her the mandate to act.

David Baker, C.P.A., VP & Chief Financial Officer Peerless Pump Company at GRUNDFOS Holding A/S
Profitable revenue growth is the single most important thing for long term improvement:

1. Seek margin improvement by exploiting sales niches with tactical price increases.
2. Review variable and fixed cost components by revenue stream to uncover incremental sales opportunities for products with available capacity.
3. Use the information from #1 and #2 and target a 10-day improvement in the complete revenue cycle by a combination of improving collections and pushing out supplier payments.
4. Look for resource sucking customers to fire. e.g. Pareto chart customers by the cost of quality, billing disputes, collection issues, etc.

Gidi Bachar
Business-oriented Finance Manager with strong accounting skills
What I’m usually trying to make sure to improve long term cash flow is to shorten customer payments and extend suppliers. It’s a very basic buy crucial. However, one should bear in mind that there is a lot of education behind it, vs. the company’s customers and vs. suppliers as well.
On top of that, the specific market environment that the company operates in will affect it as well.