RealTime CEO Blog > Fiscal Focus

RealTime CEO Cash Flow

Date: 04-09-2017
Category: Uncategorized, Core Management Principles, Fiscal Focus
Tags: Fiscal Focus, Core Management Principles

Fiscal Focus is the plain English measurement module of RealTimeCEO.  In our Fiscal Focus blog we looked at the Fiscal Focus pyramid, which describes the two main business aims: to generate return and to generate cash flow. In this blog we will discuss cash flow, which is the lifeblood of your business. Some people say to me, “Cash flow’s fine, Nick, but what about profit? That’s what really important.” Well, let me put this analogy to you. Profit is like food to business, which is important. But cash flow is like oxygen. You can go without food for a while but how long can you go without oxygen?

So, if we accept that cash flow is vitally important, let’s look at an easy way to measure our cash flow. Each of the eight Fiscal Focus levers [insert link here] is going to either put pressure on your cash flow or take the pressure off. For example, if your suppliers will give you goods today which you don’t have to pay for until later, that will ease the pressure on your cash flow. Alternatively, if you provide goods to your customers today that they don’t pay for until later, that’s going to put pressure on your cash flow.

So, how do we measure the cash flow in our business?

Have a look at this video for more insight into Cash Flow.

Tracking cash flow using this method has two advantages: one, it’s a very easy way to track it; and two, it gives you specific information you will need in conversations with your bank. But this calculation is most powerful when done over a twelve-month period; don’t fall into the trap of tracking it on a year to date or part-year basis.

Having problems keeping track of your cash flow? Are you worried about the possibility of liquidity problems? We can provide you with all the information you need to measure your cash flow and show you ways to increase it. For more information, check out our app (coming soon on the home page).

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Core Management Principle 3 – the ‘Crystal Ball’

Date: 04-09-2017
Category: Uncategorized, Should We? / Can We?, Core Management Principles, Fiscal Focus
Tags: Core Management Principles, Crystal Ball, Should We? / Can We?.

Welcome back to our series of blogs on Core Managment Principles.  We have already looked at ‘3W Accountability’ and this one discusses ‘Decision Validation’ or what we call the RealTimeCEO Crystal Ball.

“An expert is somebody who has managed to make decisions and judgements simpler by knowing what to pay attention to and what to ignore.”

– Edward de Bono.

Don’t you wish you had a Crystal Ball?

Making decisions is a vital part of a CEO’s job. By knowing how to separate the important impacts from the other impacts, you will make a better decision. But how can you possibly make a decision about the future using data from the past?  There may be other factors, for example, political or emotional considerations. Have you ever found yourself with a decision to make that has outdated, incomplete or inaccurate data, with political and/or emotional overtones? You probably relied on the thing which has got you where you are today – gut feel. We’re not saying gut feel isn’t important, but it does occasionally send you down the wrong path and it can be tough to get back from there. You need a Crystal Ball, right? Our process works with your instincts by helping you to test them.

For every decision, you need to ask two questions:

• Should we do this?
• Can we do this?

The Should We? question can be answered by looking at Return on Operations (ROO). If the result of your decision makes your ROO stronger, then your reason for being will be stronger and you should do it. If the decision will result in your ROO being diminished, then you shouldn’t. For more information about ROO see our blog, RealTime CEO / Fiscal Focus – Return.

The Can We? question depends on what it will do to your business’s cash flow. Do you have enough cash flow to fund this decision without jeopardizing your future cash flow? If the answer is yes, then you can. If the answer is no, then you can’t. For more information on cash flow refer to our blog, RealTime CEO / Fiscal Focus – Cash Flow.

Should we/Can we? brings clarity to decisions that may have been hazy in the past. In other words it gives you a Crystal Ball.

If you would like further clarity on this subject or any of our other tools, check out our app on our home page.