Managing cash flow to improve your business’ success in 2023.

As we have just begun and started the new year of 2023, is now the time to reflect and plan on the previous year’s cash flow lessons and the aspirations of the future.

In the previous blogs, we discussed Cash Flow & the Cash Conversion Cycle.

In a recent global survey of almost “1,500 finance and accounting professionals by BlackLine, nearly two-thirds (62 per cent) of survey respondents said that understanding cash flow in real-time has become more significant for their company in 2023”.

Keeping a healthy cash flow is one of the most important aspects of any business. In other words, it is the building block that enables your business to grow in a meaningful manner. Managing your cash flow efficiently and effectively can be the difference between your business flourishing or failing. It enables you to make smart financial decisions, avoid financial difficulties, and plan for the future.

All business owners know that managing cash is imperative but creating an effective cash flow management system is much easier said than done. In this article, are a few tips to help you manage your cash flow better in 2023:

1. Monitor your cash flow regularly: Make it a habit to review your cash flow regularly, at least once a week or month. This will help you identify any potential issues early on and take steps to address them.
2. Forecast your cash flow: Create a cash flow forecast that projects your expected income and expenses for the next few months. This will help you anticipate any potential cash shortages or surpluses and plan accordingly.  Dryrun is a great application for making this a simple process.

The Cash Conversion Cycle (CCC) is an essential tool for businesses because it assists in understanding how efficiently they use their resources to generate cash.

1. A shorter CCC indicates that the business is able to convert its resources into cash more quickly, which can lead to improved cash flow and financial stability.
2. A longer CCC can lead to cash flow issues, as the business is tied up in its inventory and accounts receivable for a longer period of time.

Managing the CCC effectively can help businesses in 2023 improve their cash flow, lower working capital needs, and make more informed financial decisions. This can involve strategies such as reducing the inventory conversion period by reducing lead times or improving inventory turnover. In addition, increasing the time it takes to convert payables by negotiating longer payment terms with suppliers.

Accurate cash flow forecasting is important because it helps businesses anticipate and plan for future cash needs. It enables businesses to identify potential cash shortages or surpluses in advance and take steps to address them.

Cash flow forecasting involves creating a projection of a business’s expected income and expenses for a specific period of time, typically a few months or a year. This can be done using financial statements, sales forecasts, and other data.

Accurate cash flow forecasting has a number of benefits for businesses, including:

1. Improved financial planning: By forecasting, businesses can make informed financial decisions and allocate resources more effectively.
2. Increased financial stability: Anticipating potential cash shortages or surpluses allows businesses to take steps to address them, which can help improve financial stability.
3. Better decision-making: Accurate forecasting can help businesses identify opportunities for growth and investment, as well as potential risks.
4. Enhanced financial control: With a clear understanding of their expected cash needs, businesses can better control their finances and avoid financial difficulties.

Overall, accurate cash flow forecasting is an effective tool for businesses to manage their finances effectively and make informed financial decisions.

If you are looking to manage your business better in the 2023 year whether it be through understanding cash flow better, the cash conversion cycle or cash flow forecasting reach out through one of our links below and Mike will reach out to you.

P.S. Whenever you’re ready… here are 4 ways Mike can help you improve Cash Flow in your business.

1. Grab a free copy of my book:

In The 7 Minute Conversation, you’ll learn how to analyze any company’s financial statements in 7 minutes or less. It includes a super valuable lesson on controlling expenses. — Download Here.

• Join the Clear Path To Cash – Mining Your Business For Hidden Cash Facebook Community:

This is our new Facebook community where business owners who are using the concepts taught in The Clear Path To Cash can share lessons learned and receive advice from my team and other members of the community. — Join Our Facebook Group.

• Participate in a Live Virtual Clear Path To Cash Seminar:

There are some people who prefer to learn concepts through self-study through books or video series.  For others, such as myself, it is necessary to be in a classroom environment and to be guided through the concept.  We offer a Virtual Seminar each month.  It takes only three hours each day for two days, during which you will learn about The Clear Path to Cash Program’s eight steps. 

I am so passionate about this one that I teach it myself. — Virtual Seminar.

• Work with me and my team privately:

If you’d like to go over something outside of a group setting, no problem.  All you have to do is click this link to schedule a 15-minute Triage Call. In 15 minutes, we see if my team can help you with your problem.  Sometimes we can give you some advice on the spot, other times we will invite you to a longer Burning Issues call, where we dig into the issue a little deeper and give you some great advice.  Even if we don’t believe our program is a good fit for you, we try to connect you with the right professional from our network of friends. —  Schedule Your Triage Call.