Cash flow coaching kit

• Set some time aside to think about your desired outcome. This is your starting point.
• Reflect on how well you know your cash flow position. What are your pain points? 
• Gather your financial reports and projections so you have everything at hand. 

• Do a cash flow health check to identify gaps and decide what to do next. 
• Know the 4 cash flow success factors.
• Top up your knowledge of essential cash flow concepts.

• See your numbers on a canvas and how cash flows in and out of your business.
• Explore changes you could make to increase cash in and reduce cash out.
• Play with scenarios to choose the right changes.

• Knowledge is only valuable if you act on it! Focus on the actions you will take and when.
• Keep track of your progress.
• Revisit the cards to keep improving.

Answer ‘yes’, ‘no’ or ‘not sure’ to the following:

1. Are you trading profitably?
2. Have you put enough money aside to meet your regular financial commitments?
3. Do you have enough to spend on yourself and pay others?
4. Are you improving your financial position?

Do you feel confident about the following? Answer ‘yes’, ‘no’ or ‘not sure’:

1. Planning your business? 
2. Keeping good records?
3. Funding your business?
4. Understanding how cash flows?
5. Planning your regular financial commitments?
6. Tracking your performance?

Look at where you’re least sure or confident. Use the cards to top up your knowledge and build confidence to improve your cash flow practices.

Business profits can be measured in different ways. Simply put, profitability means calculating the income your business earns minus the expenses of running your business.

This means estimating how much money you need to pay your bills and future financial commitments, including tax and super, and setting it aside.

This means measuring how quickly you can convert your business assets into cash to pay what you owe to others and pay yourself.

Knowing if your business is improving its financial position over time will help you plan ahead and thrive.

Forecasting demand helps you predict and prepare for future sales to maximise your income.

• What do you sell and who do you sell to?
• Who are your competitors and what volumes are they generating?
• How might volume change in future? Can you keep up with higher demand and get through quieter periods?

Setting the right price can maximise your income. Pricing too high may reduce customers and sales. Pricing too low may cost you money.

• What is the cost of producing your product or service?
• What are your competitors charging?
• Do you sell a unique product or service that you could charge a premium for?

Getting the right amount of capital to start or grow your business helps your business stay resilient.

• How much do you need to start your business and while it ramps up?
• How much can you afford to spend to fund your growth?

You need records you can rely on to make good decisions about money.

• Can you make informed decisions from the information you have?
• Are your records accurate and complete?

Keeping the right records is essential to meeting your tax, super and other obligations.

• Does your record keeping follow the rules?
• Will your records allow you to meet your obligations? Are they complete and timely?

An accounting system often helps you streamline reporting and make faster and better decisions.

• Do you have accounting systems that suit your needs?
• Are you using all of the available features of your accounting systems? 

An accountant or bookkeeper can help you with record keeping.

• Do you have enough time to keep your books and records up to date?
• Do you need the specialist skills of an accountant or bookkeeper?

There are different reasons to seek funding throughout your business lifecycle.

• Do you need funding to start or expand your business, or support your day-to-day operations?
• Do you need funding to fix short-term cash flow issues or buy assets in the long term?

New funding opportunities can help you increase your cash flow.

• What are the different funding opportunities for your business?
• What are the advantages and disadvantages of each opportunity?
• Can you meet the commitments of your preferred type of funding?

The terms of your funding can affect your cash flow in a big way.

• Do you have enough money to meet your repayments? 
• Can you renegotiate the agreed terms if you need?
• Are you paying down debt too quickly? Could you use this money more effectively for another purpose?

Working out the number of days until you receive payment will help you manage your cash flow.

• Do you need to spend money before your customers pay you? For example, to buy stock or tools or pay wages?
• Do you have fixed payments such as rent or lease payments you need to make even if you aren’t receiving income?
• Are your customers paying you in a shorter timeframe than you have to pay your suppliers or other creditors?

Profit is not the same as your cash flow.

• Do you know the profit that shows on your profit and loss statement is not the same as what’s in your bank balance?

Just because money is sitting in your bank account, it doesn’t mean it’s all yours to spend. Setting aside money you owe to others will help you pay it on time.

• What supplier commitments and overheads such as insurance or rent do you need to factor in?
• Do you set aside the money you collect on behalf of others, such as goods and services tax (GST), pay as you go (PAYG) withholding and super?
• Do you know that late payments can attract penalties and interest?

Certain business activities, such as employing someone, create financial commitments you need to meet.

• What activities in your business have financial commitments? For example, when you sell goods or services (GST) or employ people (PAYG withholding, superannuation and FBT).

It’s important to know your payment cycles and dates.

• Do you keep a record of your commitments to prepare you to pay the correct amount on time?

It can be easy to forget expenses such as tax and super.

• Do you put the money for your expenses, such as tax and super, into a separate bank account?

Seek help as early as you can if you’re facing cash flow issues.

• Do you consider reaching out to creditors and regulatory bodies (including the Australian Taxation Office) to make arrangements?
• Do you understand that if you don’t pay what you owe on time, your creditors may stop supplying you or you may face payment penalties or legal action?

Compare how your business is going with how you planned for it to go. 

• Do you set aside time at the end of each week, month, quarter and year to review your financial performance?
• How is your business tracking against your budget and forecast?
• What drives success in your business and how do you measure it?

Getting a clearer picture of your cash flow and business will help you make better decisions.

• What is working well and what is not working well?
• Which product or customer do you make the most money on?
• Have you performed better than this time last year?

While your past performance is not a reliable indicator of future success, it may help you to plan ahead.

• How is your business tracking against your business plan?
• What can you change?

Cash flow and profits are different. To succeed over time, you need to generate a profit and operate with a cash surplus.

On the canvas, the difference between the cash you receive and the cash you pay out, minus any goods and services tax (GST), is your cash surplus or deficit. A cash surplus suggests you’re trading profitably.

1. Start a new canvas. Choose a period in the past (typically the past 12 months).
2. Fill out the canvas to see how cash flowed in and out of your business.
3. Save it as the baseline of your past performance. Call it your review canvas.
4. Check for gaps and weaknesses in your past cash flow that may prevent you from achieving your goals.

1. Start a new canvas. Choose a period in the future (typically the next 12 months).
2. Fill out the canvas based on what you think is likely to happen.
3. Consider possible improvements. Use this card: Explore changes you can make
4. Play with scenarios and test changes by applying them to one or more canvases.
5. Decide the changes you want to make. Save the canvas with these changes. Call it your plan canvas.

1. List the actions you need to take to implement your changes. Use this card: Focus on simple actions you will take
2. Open your plan canvas. Create new canvases to break your plan canvas into short periods in the future (typically monthly).
3. Fill out each canvas with financial targets to work towards.
4. Track your progress by comparing your target cash flow to your actual cash flow. 

You can get more money coming in by adjusting your pricing, sales and how you collect cash.

Use these cards:

• Consider your pricing
• Increase your sales
• Collect cash owed to you faster

You can reduce unnecessary spending by reviewing costs, managing inventory, employing the right people and making sure assets work for you.

Use these cards:

• Review your expenses
• Manage your inventory
• Employ the right people
• Make your assets work for you

• How much margin do you need to cover your expenses?
• How much could you increase prices without losing business?
• Could you implement small regular price increases? Have you checked the consumer price index (CPI)?

• Who are your most profitable customers? What do they buy and when?
• How much time should you invest in selling to your most profitable customers?
• How can you improve the areas in your business that bring the most value?

• What other problems could you help your customers solve?
• Do customers only want one part of your product or service? Can you focus only on this?

• Will a marketing campaign increase the number of customers to your business?
• Will offering discounts or having a promotional sale increase your customer base?

• Can you offer additional products or services?
• Is there an opportunity to sell to new customers?

• Can you try a different process such as using wholesaler or selling online?
• Can you manage your process more efficiently?
• Can you convert a higher number of enquiries into sales?

• Can you raise progress bills?
• Can you invoice before completing the service or delivering the products?
• Can you automate invoicing?
• Can you make it easier for your customers to pay, for example with direct debit?

• Can you give your customers a call?
• Can you send them a reminder notice?
• Can you automate or outsource following up?

• Should you ask some customers to pay you sooner?
• Should some customers pay upfront?

• Can you afford to offer an early payment discount?
• Can you implement a late payment penalty?

• Do you have any non-essential expenses?
• Could you defer some expenses?
• Could you negotiate better terms such as extended credit, discounts for early payment or regular instalments

• Could you negotiate prices on operating expenses such as utilities, rent or maintenance services?
• Are there cheaper options for services you currently use such as communication costs and freight?

• Do you have the right people focused on delivering your core products or services to your customers?
• Can you outsource some tasks and roles?

• Do your staff understand their roles in your business?
• Do you set sales targets for your staff to achieve?

• Do you have enough staff to cover growth or peak periods?
• Can you reduce or expand your workforce if required?

• How can you keep your staff happy? More training? Review of remuneration? Create a positive culture?
• Could you reduce hiring costs by retaining your staff?

• Do you need specialist skills such as sales and marketing?
• Do you know all the laws and regulations to follow?
• Can you afford an employee? Have you considered the total cost of employment, including taxes, super and insurance?

• Are your stock levels too high?
• Could you source your products from cheaper suppliers without compromising on quality?
• Could you clear stock that isn’t selling or has become obsolete (out of date or no longer useful)?

• Could you negotiate better payment terms?
• Could you take advantage of discounts?

• Could you automate purchase orders?
• Could you reduce the lead time between placing and receiving an order?
• Could you order stock from your suppliers once you have received an order from your customers?

• How long do you need to use the asset for? Is it only for a short period of time?
• How much does the asset cost? Is it better to buy it upfront or pay for it over a longer period of time?

• Do you have assets you’re no longer using and could sell, such as vehicles?

• Is there an opportunity to get better terms from a lender?

Keep your list short and manageable.

• What’s urgent? What’s important?
• What’s involved in making the change?
• What could you achieve quickly and easily?

Don’t try to do it all at once.

• Who is the best person to do it? Do you need help?
• Is your deadline achievable?
• How will you stay focused and flexible?

Revisit the actions regularly to check your progress.

• Do you need to update your list as things change?
• How often can you track your progress?
• How do you feel after checking off your actions?