B2B CFO^® (602) 296-6888

ARE YOU MANAGING YOUR CASH OR IS IT MANAGING YOU?

By Johnny Gates

I recently saw a survey concerning the degree to which business owners are managing their cash flow. The results might be surprising to many in that only 20% of business owners felt they were in control of their cash flow. This means that over 80% of owners manage their business without having the necessary control over cash. Unfortunately the lack of financial control of your business can lead to devastating consequences. Compare this situation to driving down the road at night and your headlights go out. You can’t see any cars or obstructions on the road. The only hope is that you reach your destination before you are involved in a serious accident.

Anyone running a business needs a clear vision of how their business decisions affect the finances of the company to achieve the success they desire. “Cash is King” and every business owner should have a clear understanding of the financial implications of their business decisions to increase the chances of success. If you don’t take control of your cash, it will most certainly take control of you.

As a business owner you probably wear many hats: Administration, HR, Marketing/Sales, Finance, Operations and anything else necessary to ensure the success of the business. I have seen this situation many times in working with small to mid-size businesses. At some point the work that needs to be done is put off; the accounting and finance segment is usually the area that receives little attention. Over time an owner will notice he is not sure about the financial condition of the company or where the cash is going. Have you ever asked yourself the question “I am making a profit but I don’t know where the cash if going?” To find an answer to this question you spend more and more time dealing with cash flow issues rather than driving the business and increasing sales.

So what is the solution to this problem? Let’s take a look at a few areas that can help improve your control over cash.

Accounts Receivable – You need sales to replenish cash for future expenditures, but sales are not sales until they are collected. Do you have customers who are continually late in paying their invoices? If so, you have become a banker for your customer. In today’s economy, companies cannot afford to allow customers to stretch credit terms. Have new customers fill out a credit application. Information obtained in this process will alert you to possible bad pay habits and potential bad debts. Ask for credit references and check them out. Make sure your customers understand your credit terms and have them stated clearly on your invoice. Call the customers within one week of the due date of the invoice to see where it is in the customer’s payment process. A monthly statement can help with customers who have delinquent invoices, but frequent follow-up phone calls will achieve greater success for payment.

Managing from your Bank Balance – Sometimes when I ask owners if they know their cash balance they tell me certainly and state they check the balance online at the bank daily. This is an activity that will ultimately result in failure, mistakes and frustration. Remember, you reconcile your bank account and don’t manage from it. You must obtain your cash balance from your accounting system and not the bank. Your bank will not show checks that have been written and not cleared the bank nor will they show receipts that are deposits in transit to the bank. When a check is written, it is deducted from your cash balance on the books (computer or manual)….this transaction has not cleared the bank. Reconcile your accounting system with the bank account monthly to ensure that all transactions have been properly recorded in the accounting system and bank. If you follow the process as outlined, you will avoid serious and expensive mistakes.

 Limitation of Financial Statements – Monthly financial statements are very important to a business as they provide a historical view of what has transpired in the company and gives the business owner a better perspective of what has contributed to a profit or loss. In fact financial statements are a must for any company. Banks and investors require you to provide them and you cannot succeed without them. However, accounting rules for creating financial statements focus on measuring profit and loss….not cash flow. The financial statements may show a loss, but have a positive cash flow and the opposite is true for a profit. As an example, certain expenses that require amortization and depreciation to be written-off are non-cash expenditures that can be added back to the net income or loss to determine cash flow.

The solution to this problem is to prepare a schedule of your actual and forecasted revenues and expenses with the beginning and ending cash balances. A schedule of this type can be prepared on a spreadsheet with columns next to each other for a comparison of revenues and expenses each month. Preparing a schedule on this basis will give you a clear picture of where your money is going.

Cash Flow Forecast – If you run your business without cash flow projections, you are flirting with disaster. Establishing cash flow projections does not have to be difficult; it is simply using a few basic principles with your intuition and knowledge of the business. Here are a few pointers you should use to create a cash flow projection that will give you the confidence to avoid problems.

• Start with at least six months of actual expenses and revenues. What has happened in the past is likely to happen in the future.
• Are there any significant changes happening now that are different from the past? If so, be sure to include them in your projection.
• Be conservative in projecting your revenues and expenses. Actual results will always vary from projections. Always be conservative here to avoid dramatic unexpected results. Never project revenues that you cannot be fairly certain will occur as this will create a false sense of security. If you can be 90% certain that cash balances will come in at or better than forecasted, the forecast is conservative.
• Once you are finished with your forecast, review it again checking cash balances. Are they in line with the actual cash balances over the last six months? If you can answer “yes” to this question then you can feel comfortable with the forecast. Following this step will allow you to uncover any unusual or unexpected results in the numbers.
• If you have never prepared a six-month forecast, start with a 13-week forecast until you feel comfortable that the numbers are starting to make sense.

 Understanding your cash flow will give you peace of mind and help you start to take control of the financial side of your business. B2B CFO is experienced in working with business owners to assist in developing cash forecasts that will lay the groundwork to avoid those unexpected demands on cash. If your company does not have a CFO, isn’t now the time to hire one? B2B CFO believes that every company should have a CFO, but most cannot afford one full time. We can work with you on an as needed basis to help you meet your goals and spend more time with customers.

In mid 2009, Elaine Pofeldt, a reporter for Crain's Small Business Magazine, contacted me regarding an article she was developing about small business owners who try to sell or close their businesses. The article entitled "Preserving Your Reputation for Your Next Venture" was published on Friday, January 8, 2010. Elaine differentiates closing a business from other forms of exit such as filing for bankruptcy protection.

For the small business owner, it is imperative that prior to closing they get their "house in order." When they begin another venture, as many small business owners do; they're reputation is paramount and if tarnished from prior ventures, they'll have problems with future business opportunities.

Please take a moment to read the article by clicking here

As the storm clouds of recession appear to be on the wane, there are more stories of optimism and growth.  Many businesses will grow and thrive during the rebound - taking advantage of the fall out in their industries, attractive input pricing and the needs of their customers.  So how can you position your company for growth in 2010?

1)      Focus on your customers

Your customers are the reason you exist in the first place. If you are not spending time with your customers your competitor is. Improve customer service at all levels and seek out the customers of competitors who may be looking for a new supplier after the failure of your there existing vendor relationships. Expand the amount of business you are doing with your existing customers too. Stay close and don't allow anyone else the opportunity to go after your customers.

2)      Expand Market Share

Look for opportunities to expand your share of the market. Can you expand your geographic footprint? Are there other potential customers where you need to knock on their door? Are some of your competitors vulnerable and if so perhaps you can acquire their customer list? As the weak companies fall away from the market, there is an opportunity to expand your company's share of the market.

3)      Watch Your Working Capital Closely

Accounts receivable and inventory both decline in value over time. Make sure all customers pay on time in accordance with terms. As you grow you will find cash stretching to cover new business needs.  Make sure you control these assets tightly.

4)      Target Marketing Expense

Resist the impulse to spend more without thinking deeply about where.  The key is targeting the marketing effort to maximize the return on this investment.  Generating business from the internet? Then hire a good SEO firm to improve your Google ranking. Is your company advertising in magazines or newspapers? How do you track the results?

5)      Control Costs and Expenses

The best times to control costs are when you are growing - and when you are not!  Examine all costs and expenses by line item. Bench Mark your costs, do Process Flows to eliminate lost time. Assume all costs are unnecessary.  Challenge sacred cows.  Bid out all costs on a revolving basis - or expect to pay 30% to 100% too much.

6)      Manage Cash

Working capital encompasses all of the firm's current assets and liabilities. Are you measuring, reporting and forecasting cash?  Work with your vendors. They can be the key to getting through growth spurts if you have the relationships and trust. Work with your banks and show them the plan, explain what type of funding you will need.  If things are good, make sure they don't lump you in with their other banking clients that may be struggling. Many banks are calling loans right now, so avoid what could be a financial disaster by assuring your bank understands where you are and where you are going.

7)      Track your Key Metrics and Ratios

All businesses should have a dash board to monitor key metrics and financial ratios. What is your cash position per the bank and books? What are your sales today, last week, month and year. What is your accounts receivable Days Sales Outstanding (DSO) and what is the trend. Define these items carefully and implement a system to get you the information daily or weekly as appropriate.

Planning now will let you take advantage of the coming expansion, and thrive by taking advantage of the opportunities that lay ahead. And as a B2B CFO^®  I can help you accomplish these things and more.  Please call me on 404 348 0326 or email me at dkirkup@b2bcfo.com.

David Kirkup

Partner

B2B CFO®

Office: 404 348 0326 Cell: 770 845 6897
Email:  dkirkup@b2bcfo.com
Web:   www.b2bcfo.com

Blog:    http://www.b2bcfo.com/partners/dkirkup/blog/
Bio:      http://www.b2bcfo.com/partners/dkirkup/

As most business owners have come to realize, many inefficiencies can (and probably will) develop during booming times when a Company is focused on sales growth versus cost containment.    Expenses become secondary as long as the products/services are delivered to the Customer.   The recent recession has taught business owners and managers that the reduction and control of expenses is the key to survival.  As reflected by the Unemployment Index, the first reaction to cutting costs was to cut payroll.  So, where do we go from there?

The answer is in the details.  While different businesses have unique processes and costs, there are still various ways to reduce costs, albeit, a “Penny at a Time.”  The days of the “home run” in cost savings is unrealistic.  Here are some suggestions that may be applicable to your business.

• Meet with your major customers and suppliers to better understand their business needs and how each of you can give and take on service requirements.  You may assume that your customer needs your product the next day but in reality they can wait an extra 2 or 3 days.  This will save you in shipping costs.  Alternatively, you may not need product from your supplier the next day and can negotiate part of that savings into your cost of product.  This partnering technique brings your customers and suppliers closer to you and allows for the development of a stronger, long-term relationship.
•  Evaluate your payroll hours to determine where the most inefficient time is being spent.  For example, many distribution companies spend a significant amount of time driving from the plant to their first delivery stop and again returning at end of day.  It would become more efficient for the truck drivers to be able to add more stops per route so the cost/customer for delivery is reduced.  One way to accomplish this without adding overtime is to convert the driver’s workweek from 8 hours @ 5 days to 10 hours @ 4 days.  This will enable them to make more deliveries within their normal day plus (with proper scheduling), enable you to service your customer a 5th (and 6^th) day without incurring overtime.  This also provides better utilization of your equipment and can reduce these costs as well.
• Alternatively, consider changing your workweek for all employees to 4, 10 hour days and closing the facility on the 5^th day.  With proper energy management, you can save substantial dollars are your utility bills.  You may find that your employees actually appreciate that work schedule and may see some increased productivity as a result.
• Increase your communications with employees asking them for their suggestions and offering a meaningful incentive when implemented.  The best people to discover operating efficiencies are the ones doing the job!
• Reduce paper processing and flow that requires multiple “touches.”  Again, you want to minimize the non-productive time of your employees so they can focus on their primary responsibilities.  You don’t want a $25/hour truck driver or warehouse employee standing around waiting for paperwork.
• Carefully monitor and evaluate your inventory.  Old and slow turning inventory will cost you not only the actual purchase cost if it becomes obsolete, but the hidden carrying costs as well (warehouse space, cost of money, handling, etc).
• Have 3^rd party consultants audit your energy and telecom costs.  In many cases, you will pay a percentage of their savings.  In the best case scenario, the consultant is actually paid by the service provider and doesn’t cost you a penny.
• If you’re currently paying your employees weekly, reduce the frequency of their paychecks.  While you will probably have some pushback from your employees, there are ways to initiate this without the employee feeling a major impact on their cash flows.  Ultimately, you will defer 1 week’s payroll and gain that additional cash flow and interest savings.
• Be certain that your financial reporting systems are in order.  Before you begin to implement changes, you’ll need to be sure that you’re able to evaluate those changes accurately and timely. 
• Network with other business owners outside of your industry.  You’ll find that many of your problems are shared with other business executives.  No need to recreate the wheel if someone else has it rolling smoothly.  Beg, borrow and steal ideas that will work for you.  Since you’re networking outside of your industry, these business executives will most likely share their success stories with you.

So the simple answer to a difficult question: 

How do I continue to reduce costs with a minimal impact on my ability to service my customers?

Answer:

Think outside the box. 

The above suggestions are meant to stimulate your thought process and may or may not be applicable to your business.  A strategic thinking CFO will be able to assist you with this process in developing specific initiatives tailored to your Company’s short and long-term goals.  Don’t wait until it’s too late!

The Importance of Your Bank Relationship 

Today, more than ever, a business owner must carefully choose the bank that best fits their business needs.  A bank should be more than a safe place to deposit your checks, maintain your excess cash, and help you pay your bills.  Your bank should simplify your cash management processes, give you access to capital, and be there for you when you need them.

Your Bank

We have all seen how the current recession has adversely impacted both large and small financial institutions.  Bauer Financial (bauerfinancial.com) offers a bank rating service that uses a 5 star index, measuring a bank's strength and stability.  The rating is based on the bank's capital ratio and other financial metrics (4 & 5 stars - recommended, 3 stars- adequate, 1 star- troubled).  There is no charge for the basic star rating and an addition fee for a more comprehensive report.  It is a good idea to review the rating of a new bank you are considering doing business with as well as periodically checking on your existing bank's rating.

If your bank is having financial difficulties, it is possible they will not be in a position to support your company when you need them the most.  A struggling bank may be more concerned about their financial future than yours.  They may be unwilling or unable to renew your credit line even if there has been no significant downturn in your business.  Additionally, a struggling bank may be acquired by a lender that doesn't like or understand your business. It is possible that the people you have a relationship with will be replaced by new bankers that don't know you or understand your business. These new bankers may not demonstrate the same loyalty to their customers as your old bankers.  

In evaluating a new bank, it is important to know the lending history of the institution.  Do they understand and seek out companies of your size and in your industry?   How quickly are decisions made at the bank?  Does the bank have a slow moving bureaucracy?  Do they have a reputation of terminating relationship unexpectedly due to internal  issues?
 

Your Business

It is obvious that a bank prefers a relationship with companies that have a positive, improving bottom line and a stable cash flow.  Additionally, banks value a business that produces accurate financial statements and has a well thought-out business plan.  Nothing shakes a banker's confidence more than financial statements that are issued late, significantly miss budget or are riddled with errors.  

Banks do not like surprises.  A company that is properly forecasting their profit and cash flow should be able to alert their bank in advance of disappointing results, a possible covenant breach or the need for additional capital.  Your bank will appreciate being told of an issue  affecting your business before it happens.  Advance notice shows you are on top of the situation and the bank will be more likely to help you through a short term crisis

Your Loan

As business people we are all concerned about the bottom line.  When it comes to the cost of a loan, many of us focus exclusively on interest rates and fees.  It is important however to properly balance interest cost with the appropriate loan terms, conditions and an available open line of credit.   If there is a hiccup in your business, a low priced loan with overly restrictive and tight covenants will surely end up costing you more in the long run. Overly restrictive limits on cash distributions, capital investments and cumbersome reporting requirements are all examples of non interest costs that should be taken into consideration.  Flexibility, available credit, and reasonable loan covenants go a long way in giving you piece of mind and allowing you to sleep at night.

Amper, Politziner & Mattia wrote the article below about traditional and Roth IRA's. Retirement planning is something that individuals should review annually if not more so. We are not as diligent as our parents who saved for their retirement with a vengeance. Also, we will require more resources and capital in our retirement. Accordingly, effective tax rates on our retirement income may be higher than our parents.

The following article addresses traditional and Roth IRA's.

Next year marks the first year in which taxpayers, at all levels of income, will have the ability to convert funds in Traditional IRAs to Roth IRAs. This ability to convert will be a crucial aspect of retirement and tax planning for 2009, 2010 and 2011.

A conversion from a Traditional IRA to a Roth IRA is subject to Federal and State tax as if it were distributed from the traditional IRA and not re-contributed to another IRA. However, it is not subject to the 10% premature distribution tax.

2010 Change. For tax years beginning after 2009, the $100,000 modified adjusted gross income limit on conversions of traditional IRAs to Roth IRAs has been eliminated. Additionally, married taxpayers filing a separate return will also be able to convert amounts in a traditional IRA into a Roth IRA. This will grant everyone the ability to convert their Traditional IRAs to Roth IRAs.

Why convert?

   1. Distributions from regular IRAs are taxed as ordinary income. By contrast, Roth IRA distributions are tax-free if they are “qualified distributions.”
   2. Roth IRAs are not subject to the lifetime required minimum distribution rules that apply to regular IRAs in the year in which the owner attains the age of 70 1/2.
Unique factor for 2010 conversions. Gross income from the conversions in 2010 will not automatically be includible in taxable income for 2010; rather half will be includible for 2011 and the other half will be includible for 2012. However, a taxpayer may elect to include the full amount of the income from conversion in 2010.

Conversion Strategy is Especially Attractive to:

   1. Those who believe that the future tax free appreciation in a Roth IRA would more than offset the taxes paid on the conversion.
   2. High income earners who are not eligible to fund Roth IRAs. These taxpayers now have the ability to do so indirectly. By making non-deductible contributions to a Traditional IRA and subsequently converting the funds to a Roth IRA, these individuals now have a way to continually fund Roth IRAs.
   3. High net worth individuals who are subject to a wealth transfer tax. By transferring the funds from a Traditional IRA to a Roth IRA, the individual would be removing assets from the estate by prepaying taxes on the income and they will no longer be subject to required minimum distributions beginning at age 70 1/2. In addition, when the beneficiaries receive distributions from the Roth IRAs the income will be received tax free.
Special Added Feature – The Use of Hindsight!

An individual who converts from a Traditional IRA to a Roth IRA can later “back out” of the conversion by electing to re-characterize the IRA as a traditional IRA. If they wish, they can convert after 30 days. This re-characterization/reconversion strategy could be useful where, for example, the investments held in an IRA drop in value precipitously after a conversion to a Roth IRA. Re-characterizing the amount back to an IRA, and then reconverting it to a Roth IRA, can reduce the income arising from the Traditional IRA-to-Roth-IRA conversion.

Care should be taken as the top 2011 tax bracket is scheduled to be 39.6% versus 35% in 2009. An individual can elect to re-characterize up to the filing date of the return, including extensions. This could provide a 21 month window in which to make a decision.

Planning Tip:

Note that an individual can convert a traditional IRA into multiple Roth IRA accounts, each containing different investments. Doing so would allow the individual to “back out” of the conversion only with respect to the Roth IRA accounts containing investments that depreciated in value and not “back out” of the Roth IRA accounts that did not depreciate in value.

You look at that business you have nurtured over so many years.  You have given you blood, sweat and tears to make it successful.  Now you look at the product of your work and realize that it is time to think about letting it go. 

How do you do this?  Who will take the same care of the business that you have given to it and will they follow your dreams for the business?

These are questions many small business owners must face when the time to let go sneaks up on them.  For many companies, venture capitalists are not a real option.  Owners sometimes are shocked to see what their company will look like and where many of these transactions will take their beloved enterprise.  Others do not know how to approach such companies and whether they will get a fair price for their enterprise.

Other owners count on passing their company on to their heirs, often only to come to the realization that the heirs have no interest in running or even owning the company and have moved on with their own career and dreams.  Where does a business owner turn?

Like any other good result, the sale of a company takes years of planning and work.  Owners should identify acceptable exit plans and thoroughly investigate their assumptions in executing on those plans.  Alternatives may include:

·        The sale to an outside party (such as a venture capitalist)

·        Inheritance of a family member

·        Sale to a member of the management team.

·        A competitor within the industry

·        A supplier to the enterprise

Identifying an acceptable alternative is only the first step.  A meeting of the minds should occur long before any final alternative is selected the candidate to own your company.  The list of concerns is long and has nothing to do with due diligence at this point.  Substantial agreement should be achieved on the following points:

• What is the end result of the transaction (merger, joint venture, partnership, acquisition, etc.)?
• How does each party get there?
• Where will the company operate and be headquartered?
• What type of market strategy will the company have going forward?
• What will the management structure look like and how will it be staffed?
• Where does each party want to take the company?
• What types of valuation methods are acceptable to each party?

These and many other background questions must be answered and fully understood before the due diligence steps such, as collection of financial data should take place.

If you are struggling with these questions, or if you have not yet begun to address a viable exit strategy, please call me and let me help you work through these complicated issues.

We are all feeling the pressure of a long and harsh recession. We see it in the news every day; we see long-established companies go out of business as we feel the effect of the equity markets and our shrinking investment portfolios. Many companies are in survival mode. So, what can business professionals do? I believe it is time to get back to basics. This is the time for companies to look inside and ensure that the fundamentals of running their business are strong. At a minimum, management should look at the following four areas.
 
Internal Control Procedures
This is the time that companies should revisit the quality of their internal control procedures and ensure that they are appropriate for the current working environment. Strong controls ensure that company assets are protected from theft and fraud (a significant risk in today's economy!), and contribute to timely, accurate financial reporting. As companies downsize to reduce their costs, there is increasing risk to organizations as a result of poorly designed controls and non-compliance with existing control procedures. It is important that management address areas where such control procedures should be modified. For example, there are certain operating activities that should not normally be performed by the same individual in order to avoid conflicts of interest (one example would be where the same person writes checks, signs checks, and reconciles bank accounts). In small and mid-size companies, downsizing has caused incompatible functions to be performed by the same individual or department.

In addition, management should review the control environment to ensure that not only are controls in place, but that the controls would be effective even if they were performed as designed. An example of a control that should be performed is that a supervisor initials an invoice before it goes out to the customer. An ineffective application of that same control is that the invoice bears the initials of the reviewer, but is mathematically incorrect. The control would only be considered effective if the initials were on the invoice and the invoice was correctly prepared and recorded in the books and records.
 
Management should perform a critical self review of its control procedures and make appropriate changes to ensure that the company is not susceptible to fraud or theft. Management should consider bringing in outside professionals to perform audit procedures on the internal control system to identify critical weaknesses and recommend improvements.
 
Cash Management
Management should ensure that daily cash balances are reported. The balances reported should be the cash held by the bank as well as the cash balance reported in the company's general ledger. Many entrepreneurs focus on the bank balances and ignore the book balances. They need to understand that the bank balance is where the company is at that point in time, however, the general ledger balance is where the bank balance is headed, once all the outstanding checks and deposits clear. The book balance is the key number.
 
Forecasting
Management must ensure that it has cash flow forecasts for at least the next quarter, but ideally on a rolling 12-month basis. Many universities teach the three fundamental principles of Finance - they are, 1) Get the Cash, 2) Get the Cash, and 3) Get the Cash. How do we do this? By ensuring that controls are strong and management is anticipating all future cash receipts and disbursements, based on reasonable assumptions for the business, and making the timely and appropriate adjustments to business practices to ensure that cash balances are adequate to meet the company's current and anticipated cash needs.  
It is also important to perform rolling 12-month earnings forecasts. Such projections will enable management to plan and manage through the normal ups and downs of monthly activity, plan for those months where additional sales efforts are needed, anticipate hiring needs or contractions to meet business demands, control costs, and facilitate tax planning.  
Management should review these forecasts monthly and take the appropriate actions to ensure that the business is functioning according to its business plans, and that necessary changes are made to its plans and related business activities on a timely basis.  
Training and Development
It is always important to ensure that the company has the right people in the right positions. Now more than ever, management should examine the core competencies of each job function and determine the skill sets of each of its employees to ensure that there are no gaps in skills covering those functions. To the extent gaps are identified, training should be provided where the skills can be developed or recruiting should occur to fill those skill deficiencies. Each department head or manager should periodically (at least annually) re-evaluate the core competencies and related skill sets of its employees.
  
There are many other activities that management should undertake in its day-to-day oversight and stewardship of the company. Focusing on these four areas should go a long way toward not only strengthening your company's current financial position, but also positioning your company to get through these very challenging times. The world around us is chaotic and complex to be sure, however, this is the time to be more introspective and strengthen the things that we can control. By so doing, we raise the prospects for getting through this difficult economic period and coming out the other side stronger and better positioned to create wealth and prosperity.
 
The partners at B2B CFO® are experts in all of the above areas. Please call for a free Phase I review of your controls, cash management and forecasting practices. 

During winter each year, football fans everywhere are hoping their favorite football team wins the championship.  I can’t tell who will win the college or pro bowl games in any given year, but from my days of playing, I can tell you what type of team will win.

We’ve probably all suffered through a football game where the star running back rushes toward the line only to discover there is no hole, no place to go.  That player is quickly stopped at the line of scrimmage or thrown for a loss. On third and long we’ve seen the quarterback get sacked yet again before a receiver broke free.  A game where lackluster performance rules the day is not fun to watch.  You might find yourself thinking the coaching staff must be absent.

The team which will win is one that has all players focused on doing what they have been assigned to do and doing it well.  The lineman opens up the hole in the line for the running back to advance the ball. The linemen hold off the charging defenders to give the quarterback time to successfully pass the ball to the receiver (who hopefully doesn’t drop it).  No one great player is enough to win the game.  It takes eleven all working together, focused on the goal line and a great coach to call the shots..

So it is for businesses.  In manufacturing, for example, it takes a determined effort to make everything flow smoothly.  Engineering needs to release product structure accurately and timely and design tooling so production can take the ball and make the product.  A glitch in the line – an overloaded work center or purchasing dropping the ball for delivery of raw material or parts can cause a fumble.  Sales must line up the customers and promise delivery dates to meet their needs, lest the competition intercept the order and take business away.  Shipping has the ball last, hopefully getting the product to the customer when promised and in proper working order.  At that point the finance department had better do the invoicing to the customer and collect the cash or everyone is working for nothing.  To win, the coaching staff, headed by the CEO, needs to be on its top game.

How is your throughput?  How long does it take your company to use its resources to produce and sell its products and bank the cash?  Just one bottleneck in any business can hinder the process and unnecessarily build inventory levels.  Every employee must be focused and properly trained.  The longer the cycle of production or provision of service, the more resources your company needs, translating to higher costs and less profit. Sometimes a bigger balance sheet is not a better balance sheet.

A B2B CFO^® partner can meet with you and help develop a focused game plan to shorten the cycle and increase productivity and profitability.  Call today.