Getting the benefits from managing the cash flow

Part 2 of the knowledge program 'continuity improvement'.

How to get the benefits from managing the cash flow:

  1. develop goals and plans

  2. tune and align.

Again and again we translate the plans and the degree of alignment to cash flows.

Examples of these plans are: sales plan (a.o. which customers, when do you plan to sell what to which market segment), production planning (for both products and services), development plan (of products, services and people) and so on. Examples of alignment: level of cooperation, efficient and effective processes, having the meetings in place with right attendees and focussed on same results.

From these plans:

  1. specify the goals of the plans (benefits)
  2. why are these goals important to the company now and years to come

  3. which activities take place when (time scales)

  4. when are which and how much internal and external resources needed

  5. what is the financial impact (budget)
  6. take into account the delivery time and payment terms

  7. what are the risks and what are the consequences if they occur (risks)

Put these receipts and expenditures in the cash flow planning. Complete it with the fixed costs such as rent and salaries. The cash balance at the end of each period is now visible.

The consequences of management decisions and changes are immediately visible. The companies annual plan becomes with approach tangible and concrete. If the cash flow planning does not show the desired result, the plans can be adjusted and /or extra optimization can be realized on working capital.

Through consultation and alignment the efforts are focussed. This is what many entrepreneurs and mangment want and need. The quality of this consultation and alignment largely determines the success!

Other advantages of this approach:

  1. there is regular consultation on the direction of the company ('s activity)

  2. plans are actually elaborated, discussed and aligned

  3. there is clear overview if the planned deployment of (human) resources lead to over- or under-allocation

  4. regular monitoring if the plans and activities give the required financial and non-fiancnial results

  5. working this way gives you a cash flow planning, rolling forecast and annual plan in one.


The following article in the knowledge program on continuity improvement is "Determining which plans to implement".


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