Menu Close

Cash Flow Management

The importance of cash flow management cannot be overstated! Business don’t fail because they have to pay taxes, they often fail as a result poor cash management. Understanding your cash flow, cash needs and capital structure is critical for your company to perform at an optimal level.

I can help your business identify areas negatively affecting profitability and growth and develop solutions that are practical and technically sound. In addition to acting as a sounding board for management, I provide comprehensive, flexible strategies that address the issues affecting your business.

I believe it is important to plan for taxes however, all too often cash is sacrificed (and debt incurred) in pursuit of lowering their taxes without completely understanding the current and long-term cash and tax impacts- (letting the tax tail wag the dog). Never forget how both current and future cash levels are impacted by implementing tax saving strategies.

I listed below areas that require analysis in the pursuit of cash flow management. Note, this is a jumping off point as further analysis will lead you to the proper conclusion. By understanding how these factors impact your business you will be in a better position to grow, weather economic storms and not only survive but have a well-managed company.

Example Cash Flow Management Approach:

  • Analyze and discuss working capital [1] requirements
  • Analyze and discuss reinvestment needs
  • Identify expense adjustments needed to improve your cash position
  • Develop a realistic and conservative cash flow projection
  • Discuss proper uses of a line-of-credit
  • Review collection policies for inefficiencies
  • Review payment policies for inefficiencies
  • Review key “success factors” specific to your industry
  • Review your strategy for replacing existing assets as they become obsolete

[1] The working capital needs of a company must be determined to support projected operations. Working capital is required to expand facilities, upgrade equipment, invest in new technologies, expand distribution networks, and support anticipated growth.

  • Analyze your current and historical capital structure
  • What is the capital structure of other companies in my same industry?
  • What is the “Optimal” capital structure?
  • What is the impact of funding with equity vs debt?
  • How should I use debt to finance operations and growth?
  • When should I use short-term versus long-term financing?

What is the typical capital structure of companies in my industry?