Managing Your Cash Flow

Shake it up: New ways of working with cash flow forecasting

4 min read

18 May 2018

Former special projects journalist

Finance directors may be tasked with managing a business’ cash, but a siloed working approach is a thing of the past. An FD Surgery panel explains why company culture is a key consideration.

Recently, the Royal College of Physicians in London hosted the latest FD Surgery event, the only event series for entrepreneurial finance directors.

The FD Surgery brings together a variety of talks from experienced finance directors, and experts in a range of related topics – from GDPR and VAT compliance to managing cyber risk and new tech for FDs.

One of the highlights from the day was a panel exploring how emerging business models are shaking up finance directors’ approach to cash flow, forecasting and management.

The panel was chaired by Richard Young, a freelance writer and editor, and consisted of: Lisa Cooke from Mediwin, Scott Dale from Extra Energy, Martin Flint from Lloyds Bank, and Richard West, a former CFO of Clifford Thames.

It’s not just for FDs…

Cash flow forecasting isn’t just important for the top brass, even if they are the ones dealing with the cash day-to-day.

Dale highlighted how forecasts can also be a tool to communicate to staff what they need to do next. He claimed that “it’s not a finance issue, it’s a whole business issue”.

He also argued that, to some extent, it is a customer service issue – businesses need to “give customers the right experience and the fair experience” because if anything goes wrong, you can expect a bill in the next few months. Naturally, this needs to be accounted for in a forecast.

Cooke said that, where possible, she aims to negotiate terms to help the supply chain and ease pressures on cash flow. “We flex everything else in order to make sure that purchasing takes place where it needs to be.”

For Cooke, it’s important to always be looking at cost-cutting and payment terms, and anything that you can control, control it. If you’re looking at those things only when you’re in hot water, you’re doing something wrong. You have to feel that “buzz in the office to really know what’s going on”.

Top tips for managing cash

At the end of the panel, each of the panellists offered up their top tips for cash flow forecasting.

Flint offered up strong and steady advice – have a robust 13-week cash flow forecast in place as a way of letting people know what’s going on in the business.

For Cooke, it’s about knowing your inputs and your outputs. It’s a bit like herding cats, you have to know what’s going in and what’s going out, close off all the exits and find strategies to funnel money into the right places.

West and Dale both encouraged FDs to find a good culture fit – make cash everybody’s issue, not just the finance director’s, and have the finance people working as part of the business so they know what’s going on day-to-day and get any early warning signs that might otherwise go unreported.

In this way, cash flow forecasting turns out to be more about culture and relationships that might perhaps be expected.