Managing Your Cash Flow

Managing working capital

1 min read

22 October 2007

Spice FD Oliver Lightowlers is adamant: turning operating profit into operating cash flow is a must for a fast-growing business.

“When a business is growing rapidly, it tends to consume working capital. That makes investors nervous, especially when profit is not being turned into cash. We run a business focused on managing working capital,” he says.

Luckily for Lightowlers, Spice, the Leeds-based outsourced infrastructure support services company, is pretty good at it.

In 2007, 130 per cent of operating profit was turned into operating cash flow. The year before, that figure was 160 per cent.

So, how is it done? Lightowlers says: “Collecting debts on a timely basis and managing creditors. We have a very strong team, which is reflected in headline earnings.”

Growing the company in a controlled fashion has been the biggest challenge for Lightowlers, who was named young finance director of the year at the recent Yorkshire FD of the Year Awards 2007.

“In many rapidly growing businesses, the wheels fall off. That hasn’t happened to us. We’ve focused on ensuring that we run a good business. One of the fundamentals of that is cash,” he says.

“The challenge ahead is to make sure the transition from AIM to the main market goes smoothly.”