Growth (usually) sucks cash - and therefore careful control of cash is critical to scaling any business.  In this webinar we'll look at the 7 financial levers and propose a 1 page tool to improve cash conversion cycles.

There is a link at the end of this deck to the associated blog and webinar recording

Cash

in your business!

How to get more

Cash Acceleration Strategies

Kevin Brent

What’s More Important?..• Turnover, Profit or Cash?

Turnover Is Vanity, Profit Is Sanity But Cash Is Reality

Cash Conversion Cycle - days (CCC)

A C D

B

Cash Conversion Cycle

Sales Cycle

Make/ Production & Inventory Cycle

Delivery Cycle Billing & Payment Cycle

Based on the CASh tool from Scaling Up – Verne Harnish & the team at Gazelles

Keep a close eye on the cash!• Monitor your cash/ changes in balance frequently -

ideally daily!• Cross check with accounts receivable & payable• Set aside time each month to review CCC and ways

to improve• Speed things up/ shorten cycle times• Eliminate mistakes• Change the business model

Based on the CASh tool from Scaling Up – Verne Harnish & the team at Gazelles

Some ideas to get started…• Ask! If you want to get paid sooner ,ask. As a minimum send a statement as soon as

you payment date passes. Think about friendly reminders before the due date.• Don’t restrict yourself to invoicing once per month – and then give 30 days terms! –

Think about more frequent invoicing• Do you have to offer 30 days terms? Think about shorter terms and give a ‘Due by

Date’ • Can you encourage any form of pre-payment? Perhaps a deposit, perhaps stage

payments? Is there something you can offer to give value back for those that pay upfront/ on time?

• Think about automated payments for recurring revenues – GoCardless is one option • If customers are paying late – make efforts to understand why. There may be

something simple you are not aware of that you could change to fit in with their needs

• Think about paying some expenses on a credit card. As long as you pay it off each month then it costs you nothing (usually) and means you keep the cash in your business for up to 30 days longer

The 7 Financial Levers• Price (average spend)• Volume (number of existing customers and

frequency of purchase)• Cost of Goods/ direct costs• Operating expenses• Accounts receivable• Inventory/ work in progress• Accounts Payable

The power of small changeHow can you increase average spend?

Examples1. Add-on sales and upgrades2. Use scripts3. Upskill/ train your sales people4. Use sales check-lists5. Build a retainer model6. Increase your prices

• E.g introduce a premium product/ service

Unit Price £10 £12 £12Unit Cost £7 £7 £7Volume 10 10 6Sales £100 £120 £72COGS £70 £70 £42GP £30 £50 £30Fixed Costs £20 £20 £20Net Profit £10 £30 £10

How many customers could you afford to lose if you raise your prices by 20%?

The power of small changeHow can you increase volume - frequency of purchase?

Examples1. Maintain a customer database2. Keep in regular contact3. Reward loyalty4. Segment your customers5. Develop ad-ons/ additional products/ services6. Differentiate

The multiplier effect – 10% improvements

NOW

306,280

183,768/ 60%

112,000

10,512/ 3.4%

Sales (Price and volume)

Cost of sales

Overheads

EBIT

10%

406,463

220,136/ 54%

106,000

81,523/ 20%

Turnover Is Vanity, Profit Is Sanity But Cash Is Reality• Monitor your cash/ changes in balance frequently -

ideally daily!• Review CCC and ways to improve – monthly (Use

one page tool)• Review Financial Levers – monthly (Brainstorm the

7 levers)• Set a quarterly/ 90 day priority and focus

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