Screw cashflow … and make a plan!

My “Screw it” business perspective has been called lots of things, contrarian is probably one of the kindest.  My approach is intended to highlight the need to do the right things at the right time. To help make my point the Titanic is a great example.

When the Titanic hit the iceberg it is fair to say that long term planning, navigation, was thrown out the window in preference for the short term strategy of survival. Though many would suggest long term planning and navigation where thrown out long before the iceberg popped up! The bottom line is that different tasks have priority at different times. This is similar to your business.

The Cashflow process often generates a great deal of discussion in the media. A recent article in Dynamic Business magazine suggests that the spike in business failure is due to poor Cashflow management. But is this failure due to poor cashflow management or poor strategic planning?

Generally speaking, in business, cashflow management has a short term focus, it is focused on the day to day operations of the business. It is concerned with collecting money from customers, deferring payment to your suppliers, clever inventory management and generally controlling the daily movement of cash in the business. Although it should be closely linked to the strategic plan of the business, often they can become detached which can be fatal.

When I say “Screw Cashflow”, I am not suggesting you dismiss those tried and tested procedures that are crucial to business survival. What I mean is to conduct a review and ensure your strategic outcomes from your cashflow management are aligned to your strategic outcomes and the profitability of the business.

Cashflow management such as chasing debtors and delaying payment of creditors comes at the end of the business cycle. If your sales goals are inadequate or your costs are too high, strong cashflow management will delay the inevitable but you will eventually go broke. It is akin to bailing out the water after the iceberg has ripped a hole in your hull. So in this case, you need to revisit your strategic plan, re-set your profit goals and align your cashflow strategies accordingly.

You need to Screw Cashflow and review your strategic Profit plan.

 

 

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