An efficient small business or organization maximizes cash flow, here are 3 foundations.
If a company is to maximize cash flow and what company doesnt want that? it must first maximize the three foundations that generate cash flow:
- Sales flow
- Operational flow
- Financial flow
Organization is the key.
One thing that every business has in common is the desire to maximize cash flow. Thats because for any business, success is determined by the amount of cash flow it can generate and safeguard, and how this is accomplished is through organization:
- The FlowFirst model states that a company must first maximize sales, operational, and financial flow to maximize cash flow.
- Organization generates efficiency, which generates time; time is money.
- Be cognizant of the processes that run your business and ensure they are operating smoothly across all three foundational flows to improve cash flow.
The FlowFirst model states the following: if a company is to maximize cash flow, it must first maximize the three foundational flows of sales flow, operational flow, and financial flow. And that begs the question of how to maximize these three flows that generate cash flow.
Efficiency within the three flows, and efficiency in the interaction of each of the three flows with one another.
As any effective manager knows, efficiency is begotten by organization. As the business owner, it is your responsibility to be cognizant of the processes that define your organization. After all, whether in the realm of sales, operations, or finance, each of these processes contributes to the overall efficiency of your business, and therefore to your potential cash flow.
Organization creates efficiency. Efficiency creates time. Time is money (also known as: cash flow).
So what can a business owner to do introduce more organization into a company?
Here are some straightforward examples:
On the sales side:
On the sales side, implement a process that tracks sales and reminds the sales teams of appropriate follow-up points. That way, time is not lost trying to retrieve data and opportunities are never missed.
On the operations side:
On the operations side, the right organizational system can capture daily deliverables that lead up to project delivery, ensuring milestones are met on-time and that each member of the team is doing his or her share of the work. If multiple users have access to the system and the system can generate daily reporting, time will never be lost trying to ascertain key operational metrics.
On the financial side:
And finally, on the financial side, execute a process that automatically generates financial statements on no less than a monthly basis. Organize all financial activities so that transactions and reconciliations build on each other to generate these financial statements.
As the FlowFirst model illustrates, organization for the business owner goes beyond just maintaining a neat desk. By organizing your companys process, you can save time and effort across the board to help your business maximize cash flow.
About the author
Alexander J. Hart of Cuban American decent is principal and founder of Hart Vida Raffo. With over 25 years of experience, Alex specializes in the areas of tax strategy and planning, business process improvement, and capital consulting. Whether advising on capital and financing strategy or consulting for privately-held professional services firms, Alex has the expertise and practical know-how to help any company optimize their business processes and make tactical financial decisions. He began his career at IBM in sales operations and accounting. He was a Controller for the N.Y. Post, has been a CFO for a medical device company, and has written a tax column called “Ask the Tax Guys” for Micro-Cap Review. Alex is a professional member of A.L.T.A. (Affiliated Lawyers of the Americas), a member of the National Association of Tax Preparers, and is a contributing author and mentor at Latin Business Today. Alex graduated from St. John’s University with a B.A. in Spanish and his M.B.A. in Finance. He obtained his accounting degree from Pace University.Website