Conserving Your Cash 

Accelerate Your Business in 2021

Establishing your cash culture

  • Build A 13- Week Cash Flow Forecast
  • Revenue Restructure & Expense Strategy
  • Identify Inventory Oportunities

Every CFO in the world was affected in one way or another by the Covid-19 pandemic. To drive value for our clients early last year, we conducted a webinar series discussing a modern approach for accelerating business during the pandemic.

Now I’m sure you heard all about “pivoting,” “adjusting to change,” or “these are trying times.” Every single webinar you attended in 2020 said those same things. Instead, we discussed the Top Five Recovery Actions To Accelerate Your Business.

We are now revisiting these steps and discussing how each step can be implemented in the new year.

The truth is that the economy’s state does not define a company’s growth phase—it doesn’t—so, keep in mind as we discuss steps on accelerating your business this year.

Build A 13-Week Cash Flow Forecast

Building a 13- Week Cash Flow forecast is one thing your business needs during good times and in trying times. When discussing ways to accelerate your business and conserving your cash, a Thirteen Week Cash Forecast (TWF) is a great tool that will help you be strategic with your collections and disbursements, as well as to run “what-if” scenarios.

You need to where your cash is and what it’s doing to conserve it. To analyze the next steps, you need to identify any potential liquidity issues and determine actions to resolve those issues.

For example, if a potential liquidity shortfall is identified with ten weeks’ notice, your team will have time to prepare, strategize, and deliver.

Revenue Restructure & Expense strategy

 It’s generally good to scrutinize every single penny that leaves your business bank account, but you will need to be especially critical of spending when conserving cash flow. Analyze expenses and only spend on the costs that keep you operational and generating revenue.

Analyzing your revenue structure and order-to-cash process can lead to discovering opportunities to accelerate cash flow during this stage. Consider changes to pricing, payment terms, contract terms, credit, and collection policies.

The quicker money begins flowing into your business, the sooner your cash flow problems will be solved. Take a page out of Tesla in Q4 of 2019 when they encountered cash flow problems. Tesla changed its receivables process by offering and accepting pre-orders for a product before it hit production.

Identify Inventory Opportunities & Convert Them To Cash

Excess inventory can quickly become obsolete and worthless as customer requirements change, and new materials are introduced. Reviewing and taking actions against idle, outdated, and non-working equipment can free up tied capital, which will be better served in other areas of your business.

Older equipment will usually have a book value equal to its salvage value or less, so a sale might result in a cash gain.

Although this is a temporary fix, as you can only sell an unnecessary and outdated item once, it is an effective and quick way to increase cash flow.

Cash is King

Understanding and utilizing the cash flow conservation strategies above can build up your bank balances, extend the number of strategic options available to you as a company, and set you on the path to accelerate your business in 2021

Start Implementing These
Strategies in Your Business Today.

At CFO Alliance, we help our clients improve their cash flow management and create value with a high caliber team of financial leaders who specialize in transformation through accounting, strategic finance, business process improvement, mergers & acquisitions.

With the right mix of financial leadership and human touch, we can fine-tune your business model and discover cash flow opportunities to accelerate your business.

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