Understanding Your Cash Flow

June 23, 2020

The GrowthLab Weekly Jump is an information session hosted every Monday that tackles relevant issues in today’s trying times. Jumpstart your week with practical advice in times of uncertainty.

In case you missed this week’s Jump session, you can find the slide deck & recording below:

This week’s focus is on planning for your PPP loan forgiveness application. As well as the first step to The GrowthLab Four: Understanding Your Cash Flow. 

Which PPP Forgiveness Application… Long or Short?

In Case you missed last week’s Jump where we discussed the GrowthLab Four, here’s a recap. 

  1. Understanding your cash flow
  2. Know where you make & lose money
  3. Marketing for profit … not just revenue
  4. Paying employees for performance … to achieve company goals

Understanding Cash Flow 

  • Understand
    • Cash is King and Cash ≠ Profit
    • Cash conversion cycle
    • Cash is used to fund…
      • Operations (working capital)
      • Capital expenditure (finance)
      • Distribution to shareholders & owners (dividends)
  • Design
    • Anticipation & visibility are the goals
    • What are my immediate needs? Funding a scaling company or a payroll shortfall?
  • Implement
    • 13-week cash flow – Historical AP, vendors, recent expenses,& expected AR. Update weekly.
    • 12-month cash flow – Based on Annual Operating Plan (AOP/Budget) & Long Range Plan (3-5 yrs).
  • Measure
    • Actuals-to-budget, Days Outstanding ratio (DSO), indirect CF statement (Cash from Operations)
    • Net income is only as good as the cash conversion cycle
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