Telling the story

The aim of this part of the website is to illustrate financial issues through stories. A cross between a regular cartoon in words, and a blog, designed to entertain, as well as to keep you thinking about things financial.

The episodes come under three main headings - profit, cashflow and budgeting, and build on the things we look at in our training. As you read them, enjoy them, but also think about how they apply to your organisation.

Current Articles

Resilience 2 - (cashflow)

This is the second in my series of three blogs about what makes a business resilient.This is important, as in the aftermath of Covid we're going to need all the resilience we can find.

Last week we looked at profitability as a factor.This week we're looking at cashflow.Profit is about how much money we make; cashflow is when that money hits the bank account.

We experience cashflow in our personal lives.We earn enough to pay all our bills over the year, but we're often short of money at Christmas; or if the car needs an unexpected large repair bill.

Cashflow is about making sure our customers pay us on time.This means means negotiating good payment terms with them, but also making sure we chase our invoices until they get paid.The problem with this is that we're taught that it's rude to ask people for money…

Customers can only pay the bill once they've received it, so cashflow is about billing as promptly as possible.

It's also about being aware of how much cash we have tied up in stock.The goods in the warehouse represent cash that isn't in the bank account.

If we have positive cashflow, we'll have money in the bank, rather than an overdraft.And Covid has certainly taught most of us how important it is to have some savings to tide us over a difficult time.

So how do you impact your company's cashflow?

Resilience 1 - (profit)

Covid has caused huge difficulties for many businesses. And if (as seems likely) recession follows, that will cause many more difficulties. Yet some businesses seem more resilient than others.

So what makes a business resilient?

I think it's a combination of three things, which I'll examine in three separate blogs.But we all have an impact on these three factors.

The first factor is profitability.Or making sure that our costs are less than our income.

Cost management is clearly an issue here.We are all part of this: making sure that we do things in the most efficient way; and making sure we focus on doing the things that need doing, rather than things that we wouldn't miss if they didn't happen.

But it's also about managing sales.This could be about making sure we invoice everything we can invoice, and not doing work that's outside the scope of the contract, and which can't be invoiced.So our teams need to understand the small print of what's within the contract, and what isn't.

And it's about managing prices.We need to make sure we're charging the right price for what we're selling.That's the detail of putting the right things onto the invoice (don't we love it when we buy a large coffee, but we're only charged for a small one!).It's also about setting the right prices, and about our sales people negotiating good prices with customers.

Which of these elements doyou have an influence over?

Where are we going - (budgeting, profit)

A friend has just got a new job, and shared his tips: "Have a plan, be flexible, spread your bets, be proactive, and believe in yourself."

These reflections also apply to our businesses, whether we're large or small; just returning to work after lockdown or have been busy throughout.

"Have a plan, but be flexible."Like many managers, I ditched my 2020 plan in March when it became irrelevant.But I've kept my goals in focus and have worked out different ways of achieving them.We have to be clear about where we're heading (even in times of crisis), else we'll end up in the wrong place.

"Spread your bets."A friend has a coffee shop.Is she in the business of running a café, or supplying customers with coffee?Covid has taught us to look more widely and creatively at what we're in business for.

"Be proactive."But we spend much of every day dealing reactively with that day's crises and issues.We have to ensure that we keep our long term goals in focus.Every day I think "What have I done today that moves my business forwards, and what has just been dealing with today's tasks?"

"Believe in yourself (and your team)."It's so important to do this, but to also be realistic about our shortcomings, and plug those gaps.

But I think the most important thread is being clear about our goals.If we don't know the destination of the journey, we probably won't get there!

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Resilience 2. One of a series of articles to to keep you thinking about things financial.

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