What does thirst have in common to your cash flow?

What do you do if you are thirsty but there is very little water in your glass?

Correct – you go get more water and top up your glass.

Your company’s cash flow works the same way. Check out this video to see how!

The glass is your company’s bank account, the amount of water in it is your cash balance and the sips you take are the outgoing payments. Topping it up = receiving incoming payments from clients.

There’s a slight challenge though.

It takes just a few seconds to top up your glass with more water. But if you understand you need “more water” for your cash flow, ie to secure additional incoming payments from your clients, it can take several months to achieve.

Especially if your company offers services such as marketing, construction, consulting, technology etc.

The “sales to cash” cycle that starts with selling another engagement, continues with signing of a contract, delivery of services, invoicing and concludes with your company receiving payments can easily take 6, 9 or 12 months.

And this is why we do financial planning for our companies.

If your “sales to cash” cycle is 6 months, you should plan for at least 7 months ahead.

Because if your forecast shows you might have a cash shortage, you want to learn about it as soon as possible – while you still have time to avoid this risk.

And the best part – you don’t have to be a finance wizard and don’t need to spend long hours doing your financial planning.

Check out Tailwindapp.eu: Simple & Easy Cash Flow Forecasting – it will create your initial forecast for you and will automatically update it every time you log in. So just 5-10 minutes per week will be enough to be in control.

May your glass always be full!