Negative Cash Flow in Your Business? Discover our Five-Step Process to Positive Cash Flow

When your business is growing revenue it’s also growing the amount of money owed by clients through a growing amount in debtors, growing overheads with a change in your staff numbers, hiring qualified people to manage different areas of your business, and additional resources to manage a more complex business. There are also additional costs within the areas of marketing, and sales from a need to generate more leads, convert more clients and control the entire process.



If not managed correctly your business will experience cash flow shortages which hinder growth or place your business at greater financial risk as the percentages in these areas grow disproportionally to your revenue. The challenges for your management team is to continually catch this disproportion before it becomes a problem. 


A Five-Step Process Toward Positive Change


Step 1 - Assess the Gap

An immediate requirement to manage your business’s cash position is to assess the growth gap between conflicting items e.g. Revenue to Growth Profit percentages; Revenue to Net Profit percentages; Marginal Cash Flow percentage change; Operating Cash Flow percentage change; and Net Cash Flow percentage change.


Step 2 – Project Future Growth

After an assessment is completed of the previously mentioned key areas, we then need to project the future growth of your business using robust business modelling tools. Therefore, we assess the past 2-years, 3-years or 4-years financials to get a baseline set of key financial indicators and the financial changes your business has experienced.  Once we have this loaded into our business model, we then perform a number of what-if scenarios by changing percentage to financial drivers such as (1) Price Increase % (2) Revenue Growth % (3) COGS Reduction % (4) Overheads Reduction % (5) Reduction in Receivable Days (6) Reduction in Inventory Days, and (7) Increase in Payable Days.


Step 3 – Adjust the Parameters

Once this has been done, we can then adjust the parameters to produce revenue growth with an alignment in gross profits, net profits, working capital and business value increase. Build in key financial indicators for your business to follow as your business grows.


Step 4 – Monitor Regularly

Once a what if model has been agreed to e.g. the level of desired growth is set, profit is assured, cash flow aligned, and your business’s value is increasing we then move forward with growth plans and monitor your business financial performance monthly, quarterly, six monthly and annually. We do this monitoring to make sure your ’now in place’ financial budgets to the actual monthly results are within desired levels.


Step 5 – Adjust Quarterly, Replan Annually

Monthly budget to actual is the regular monitoring process and is great to keep things on track but it’s simply not enough.  Separate management meetings. They need to be done quarterly to make larger decisions in maintaining direction or making adjustments to keep the balance between growth and cash flow results. As an example… the growth of your business could take a more aggressive approach if your cash at bank is growing more positively than expected. If cash at bank is growing less than expected then we may need to look toward product/service offering, client segmentation, or underlying systemic changes.

Annual planning with financial modelling gives an ability to assess exponential growth via methods outside of simply selling more products or services.


Easy Process to Gain Financial Stability

Steps one through to five may seem like a lot of work, however, this is not necessarily the case.  A cost-effective process can be implemented easily with our support.  To get started… simply call us for an initial consultation meeting. 


If you would like to discuss your cash flow, business planning and growth needs please contact me here. ProfitPlus are experts in business planning and business growth . We offer unique services that combine creating a business plan coupled with business coaching programmes such as our 90-day PlanningCLUB’s, find the profit and cash flow programmes. We provide interactive planning and business tools to help you through your business planning process simply and effectively. Our two-day planning workshops result in outstanding 1 or 5-year business plans, created in just one or two days, to help you develop and plan your business for success, giving you higher profits (and more salary), more time away from the business, greater cash flow and increased value.

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