“Change” is replacing one thing with something else. “Transformation” is the word for a dramatic change from one entity into another.

After COVID, most businesses that have come out on the other side have truly transformed themselves from what they once were into entirely new entities… and there’s no going back.

These businesses and their owners have transformed how they complete their entire day-to-day operations. They did what they needed to survive, and now that we’re on the other side, they can refine their strategies and begin to thrive and grow.

Small to medium-sized businesses and even larger corporations have been able to adapt to whatever last year had thrown at them and began putting their specific controls in place. Strategies have been adjusted, plans have been changed, and entire businesses have been pivoted.

Ask yourself, as a business, did you capture innovation and intention last
year?

 

Have you put controls and tools in place to support you when you need them the most? If your country or city is in lockdown again, how would you handle it?

It’s time we take this opportunity to create formal strategies to outline our business’s new ways of operation so we can track our progress and monitor our growth. This will help us continue to improve during times of uncertainty.

By now, you’ve probably also realized whom you want to surround yourself with.

Being in the company of creative, collaborative people that stimulate ideas and faced the challenges of 2020 head-on is where you want to steer your ship. And if you’re still not in this mind-frame, you might want to evaluate your leadership capabilities.

The fact is, if some business leaders had met those challenges with less resistance and worked on pivoting their operations, they may not have suffered as many consequences. Embracing change can be difficult when processes are not flexible or transparent. This makes valuable insights difficult to
come by and makes making informed decisions regarding your business next to impossible.

Try transforming your business when you are 3 months behind on the books… it’s not looking so easy now, is it? Many businesses don’t even know where they stand financially until taxes are due. They could be dead in the water and not even know it.

Leveraging technology to help make informed decisions.

 

Leaning on technology can make these types of transformations much easier, and more insightful. By connecting to your cloud-based accounting software, you can run scenarios or access insights that would have previously taken weeks to prepare.

Worried about another scenario playing itself out in 2023?

Collaborate from afar with your team or share important insights with your financial advisors/accountants. Whatever the use cases, make sure your cash flow is covered.

Pinnacle Accounting is your partner in your company’s transformation.

 

The opportunity lies in the numbers, and your time is valuable. Connect with me if you want to learn more. Feel free to visit the website www.pinnacleaccountinginc.com, email me directly at jake@pinnacleaccountinginc.com, or click the link below to schedule an appointment.

 

https://go.oncehub.com/pinnacleconsultation

Online appointment scheduling

Pick a date and time that works for you

-it’s fast and easy.

Cash flow is on every business owner’s mind due to the global economic conditions that the past couple of years have wrought. Understanding cash flow as a concept and as a series of processes helps businesses succeed and has become especially important in an economy like we’re experiencing now.

What is Cash Flow?

Here’s a quick definition to start:

Cash flow is the movement of money into and out of – your business. Most businesses have three forms of cash flow:
● Investing cash flow: asset purchase and investments in other business ventures
● Financing cash flow: gains and losses from a company’s debt and equity
● Operating cash flow: money generated by a business’ regular transactions

Let’s focus on operating cash flow. In other words, let’s agree to observe and discuss the daily, weekly, monthly, and quarterly business transactions that result in cash entering and leaving your business.
● Operational cash inflow is when revenue from a sale arrives in your business.
● Operational cash outflow is when your business has to pay some sort of bill or expense

 

Why is Cash Flow Important to a Business?
…or rather, how long can my business exist with no inflow?

While businesses appear to fail for many reasons, the majority of their problems are cash management related. Perhaps there are not enough sales to sustain the business, perhaps important and timely purchases were mishandled, or the business cash position has become negative over some time and there is a final ‘death blow’ in the form of a more acute incident that topples the business (2020 – we’re looking at you for this last one!)

With the right information and management techniques, a business can predict how long they can stay in business – knowing this will help prioritize and plan how you manage your cash…and likely keep you in business longer.

 

  Monitoring Cash Flow: “I need to keep my finger on the pulse of my business”                                                                                                   

Each transaction in or out of our business is a piece of data that we can use to measure whether we’re moving toward positive cash flow. We might examine recent financial statements, costs/sales, and budget/actuals to hone in on important data.
Monitoring cash flow is a low-intervention activity that provides information to support cash management.
We can compare other businesses’ cash flow data points with our competitors if they’re known.
We can compare our historical cash flow situation with our present one.

Your goal: To continually observe your cash inflow and outflow data to find the date on the calendar when your business would have to close due to not insufficient revenue (runway date). Cash flow is often cyclical so be sure to pick out logical windows of time looking for trends in your business’s cash flow. Logical windows of time might be a year, a season, a week, 13 weeks, or even in some cases, daily.
The measure of success for M1: When you have your business’ potential closing date or runway; you can name the factors that affect your inflow and outflow; you can talk knowledgeably about the cycles your cash flow experiences.

 

Cash Management: “I’m ready to control my business so I can be proactive about risks and growth opportunities”

 

Cash management occurs when a person or process plans and manipulates cash inflows and outflows to extend the business’ runway.

● Cash management is transactional: upselling a product to get more revenue; paying an invoice on the negotiated terms and not before
● Cash management is operational: inventory management, sales, managing payroll
● Cash management is strategic: mid- and long-term planning to advance the goals of the business ‘best advantage

Managing cash flow is a high-intervention, high-communication activity that uses monitoring information and real-time tools to manage cash with the ultimate goal of achieving and remaining cash flow positive.

Your goal: To manage transactional, operational, and strategic circumstances so the business can continue to extend its runway.
The measure of success for M2: When your business can extend its closure date by adding to its cash reserves (savings), ably addressing shortfalls, comfortably repaying debt, paying shareholders, or investing in itself – you’re managing cash effectively.

 

Cash Modeling: “I need visibility around the possible outcomes of future events, and the ability to stress-test my
business against internal and external ‘what if scenarios”

 

Cash modeling occurs when a person or group clearly articulates and then shows the causes and effects of an event(s) on business cash flow.

● Cash modeling requires an understanding of the business, its cash monitoring findings, and cash management practices.
● Cash modeling starts with an idea: “What if X were to happen on [date]?”
● Cash modeling should be approached as a series of quick sketches that can either be discarded or refined as time progresses
● Cash modeling should be considered extensively from both growth and risk angles

Modeling cash flow is a high-value, communication-based strategic activity that uses monitoring information and real-time tools to create and consider ‘what if’ scenarios to plan business movements around risk and growth. All stakeholders should be invited to model out what-ifs that affect their particular domain.

Your goal: To stress-test your business against the most likely scenarios to better prepare in case those scenarios come to pass, thereby affecting your runway date.
How you’ll know you’ve achieved your goal: While nothing is assured, an extended sightline along which you’ve plotted various events and their cash impact will help you weather risks and growth opportunities in the future. Stress-tested against a variety of imagined scenarios, the runway will seem solid and long and decision-making is more straightforward. Modeling what-ifs leads to clarity of mind, effective prioritization, action, and communication with your team and your stakeholders.

Pinnacle Accounting, Inc is dedicated to helping you achieve these goals. We can deep dive into your current business structure, tax strategy, and accounting system to ensure that you have the tools to move towards positive cash flow. Feel free to visit our website  www.pinnacleaccountinginc.com, email us directly at jake@pinnacleaccountinginc.com or click on the following  link to schedule an appointment.   https://go.oncehub.com/pinnacleconsultation

As a business owner, you have every right to ask for cash flow management support and guidance from your Financial Advisor. They are obligated to provide you with input/solutions/tools that will give you the opportunity to survive and regain your success.

Challenge your partners to be better or find someone who will.

If your Advisor is not coming to you with the knowledge and solutions required to assist in your cash flow management – you need to look somewhere else.

We are in unprecedented times and that means we need unprecedented solutions to our global economic problems. Sound the alarm and get what your business needs before it’s too late.

So, what exactly should you be looking for?

In this article, we’ll explore some of the solutions you should be asking for from your Advisor in order to set your business up for success.

Things like:
1. Cash Flow Forecasts
2. Sales Forecasts
3. Budgets Forecasts
4. Comparing Scenarios
5. Collaboration
6. Help & Support

Cash Flow Forecasts

By working with your Advisor to identify shortfalls before they hit, you’ll ensure that you have enough time to react. You could even plan ahead for these potential shortfalls so you can really take the bull by the horns and take control of the circumstances.

Planning for shortfalls by using cash flow forecasts ensures that you’ll have enough money on hand to cover an emergency like this, and you may even be able to use the capital to help grow your business and come out ahead. Your competitors who didn’t plan for shortfalls may not be so “lucky”.

Sales Forecasts

Financial Professionals can also point you in the direction of many tools or methods to facilitate realistic sales forecasts. Being able to manage your capacity of your current team will allow you to set realistic goals and even exceed them if everything goes according to plan.

Being able to understand the timeline and timing of deals is crucial for your business success.

Simply keeping a list of deals will not tell you whether you’ll meet your goals, or indicate any potential capacity issues. Recently, there have been different software developed to enable you to forecast sales accurately and allows you to know when you can count on revenue to power
your growth (or whether you’ll need to take advantage of those cash flow forecasts we talked about earlier).

Using technology to your advantage is always a good idea if it is available to you, and your Advisor should be recommending this.

Budget Forecasts

Financial Advisors are not just accountants, they are trained, analytical professionals. As a result, they should be able to offer your business advice on budgeting and creating budgeting forecasts.

This is important to know your break-even points for various company goals, along with your budget risk. Keeping track of inflows and outflows can be tedious and it’s easy for things to get missed. Don’t let this happen to you!

Your budget is the foundation of your finances, telling you how much money you need to operate and how much to grow. This living document sets the course for your business, your goals, and your plans for growth.

Maintaining proper budget health can decide the life or death of your company.

Comparing Scenarios

How do you make critical decisions in your business?

A lot of business success comes down to the decision-making process of their leadership. If you have bad insights, you’re likely to make bad decisions.

But on the flip side, that means if you have good insights, only good things can come of it!

Programs recommended by Advisors can allow each user to model and save unlimited scenarios and then compare them against each other. This type of practice exercise allows small business leaders to walk through potential outcomes on a regular basis and choose the soundest strategy based on what is modeled before them.

As opposed to manually comparing scenarios using spreadsheets and a good old fashioned calculator, checking scenarios using industry software takes seconds and can be the difference between a life and death decision for your business.

With enough financial information from you AND in collaboration with your accountant, you can use this type of technology to show and model how each key decision in your business might affect your revenue.

As key strategic players in your business, your Financial Professional should be able to advise you on the type of technology at your disposal that can help with your modeling and forecasting.

Collaboration

Of course, you should be collaborating with your Advisor to make the best decisions for your business. Teamwork makes the dream work, after all.

But you can also use software to your advantage and to save you some hard-earned cash when it comes to your hourly rate or retainer. You know how to run your business, but it gets easier to make calculated decisions the better tools at your disposal are.

Imagine how easy it would be to collaborate on a forecast with whoever you want whenever you want – while keeping complete control of the permissions/access each team member has. You can also change access levels to match your business structure, to ensure the right people are
able to access the right tools, analytics, and financial information.

Help & Support

Like the Beatles, we get by with a little help from our friends… or our Advisors.

Financial Advisors will help us with the numbers and strategy side of things and the support team from the collaborative software you choose to use will help you to use the available tech to get the most out of it.

Whether it’s through instant messaging chat or through email support, your accounting software support will be there to help you and your accounting team utilize it to the highest degree and access the appropriate insights.

Pinnacle Accounting, Inc is dedicated to helping you navigate through these strategies. We can
deep dive into your current business structure, tax strategy, and accounting system to ensure
that your specific needs and goals are met. Feel free to contact us through the website https://www.pinnacleaccountinginc.com/ or by email at  jake@pinnacleaccountinginc.com

Your can also schedule an appointment at https://go.oncehub.com/pinnacleconsultation