Business Analytics: Sample TrendBoard Results

Home Business Analytics: ScoreBoard Display Demonstration The 12Faces ScoreBoard is a business analytics tool for small and medium business. It takes your annual, quarterly and monthly accounting data and displays it in a business analytics template using a  graphical format for easy interpretation. We show a few examples of our business analytics tools here for […]

Key Business Indicators: Interpreting TrendBoard

TrendBoard Trend Analysis TrendBoard is our tool for visualising trends in your performance data so you get an early warning of any problems more on the ScoreBoard trend analysis tool here Key Business Indicators 12Faces is committed to helping you achieve Sustainable Business Success.Sustainable means on-going, you need monitoring tools to check your business’s health. Dictionary of Business Finance Terms In […]

C2.5.2 Increase Revenue – Improve Cashflow

Be mindful of the old adage; “Revenue is vanity, Profit is sanity and Cash is king!“. There are a couple of quick boosts to your Cashflow that will help to give you Working Capital for use in tuning other parts of your business. Contents List:Surplus InventoryAccounts ReceivableAccounts Payable Surplus Inventory By the time you have […]

Learn Why Cash Flow Beats Profit

Cashflow refers to the flow of money through your business. It usually goes out so you can buy stock and pay expenses, like wages and rent, and comes back when you sell that stock and collect the money from the buyer.  Profit is an accounting term trying to show income less expenses. It suffers from so many accounting ‘treatments’ that it is not much use for small business managers.  This might sound like a “dry” topic, but mismanaging Cashflow is probably the biggest reason why both big and small businesses fail.  It is something you should be aware of and learn how to use it to your advantage. Yellow Belt 

Learn about Daily Sales Outstanding Metric

Summary

cashflow is the life blood of a business but it is a difficult thing to grasp as an abstract idea.  “Is my cashflow OK?” is difficult to answer.  Effective management of Accounts Receivables is part of the answer.  The  Accounts Receivable Daily Sales Outstanding (DSO) ratio, and its partner, the Daily Accounts Payable Outstanding (DPO) ratio respectively measure how many days it takes to collect the money owed to you and the days it takes for you to pay your suppliers.  If DPO is more than DSO, you are paying suppliers slower than you are getting money from your customers and you are in a positive position.  It also means you can fund your growth (to at least some extent) from sales.  If the DSO is larger than the DPO, you are paying suppliers before you collect from your customers so you will need an overdraft and may actually run out of cash in the foreseeable future.  Also, you will not be internally generating sufficient money to pay for your growth and will need to find other cash sources for that.

These two ratios should be key metrics on your dashboard so that you can rapidly see if cashflow is becoming unhealthy.

Read this if: you are in business!  Seriously, understanding your cashflow is a basic necessity for a business.  These two ratios help explain your current position and trends.

Relies on:  the use of ‘Dashboards’ to monitor company-critical information.

Audio/visuals: none.

Degree of Difficultly: yellow belt (entry-level).

How to Measure Net Cashflow

Cashflow is the lifeblood of any businessIf the speed you collect cash owing to you is slower than the rate you pay it out to your suppliers, you are going to find it increasingly difficult to find the money to pay your suppliers.  Unless this is rectified, you stand a good chance of going bust. Positive cashflow also gives you money to fund your business’s growth from your own operations without borrowing.  Knowing your cashflow allows you to plan affordable growth. This article introduces Net Cashflow and Marginal Cashflow / Current Ratio concepts for measuring Cashflow health.  Periodically measuring your Cashflow situation can make you aware of any looming problems in time to rectify them. Yellow and Blue Belt level

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