Cash flow management and performance management

A growing technology company had a rudimentary cash flow system managed on a weekly basis by the CEO. Like many Engineering & Technology companies, cash flow can be turbulent, especially in a project type environment. Thankfully, the company recognised the importance of cash. This process was consuming at least a day of effort each week, distracting the CEO from product development, engineering support and developing solutions with clients.

In addition, a recurring issue was struggling to pay VAT and related taxes on time.

situation

SOLUTION

Working with the CEO, Steven determined what was critical to the CEO and why. Steven simplified the data gathering process and implemented separate holding accounts which were drip fed with cash until they could cover all expected future tax liabilities. This account could not be used for day-day expenditure and this discipline helped implement spending control and cash management within operations.

In addition, leveraging the accounting software, weekly reporting was moved to monthly management accounts, with only a brief summary provided on cash, invoices raised, creditor and debtor position.

OUTCOME

The CEO could take a hands-off approach and focus on the business knowing that all tax payments were accounted for and the weekly reporting should provide early warning of potential issues. Financial performance could now be scrutinised on a monthly basis, with the Management team taking more responsibility.