💰 The 3-Month Playbook for Controlling Your Cash on Hand

🏆 Goal:

Take control of cash flow, ensure enough liquidity for operations, and avoid cash crunches.

✏️ Definitions:

Cash on Hand: The cash readily available in your business for day-to-day needs.

Cash Burn Rate: The rate at which your business spends cash over a set period.

Cash Reserves: The minimum cash balance you keep to handle emergencies or downturns.

Cash Conversion Cycle: The time it takes for your business to convert money spent on inventory and other resources into cash from sales.

📊 Results & Measuring Success:

💥 Immediately: Reduce unnecessary expenses and boost cash visibility.

🔍 30 Days: Improve your cash conversion cycle, bringing in payments faster.

📅 60–90 Days: Increase cash reserves and lower your burn rate.

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Part I: Mindset Shift

🤔 Step 1: Think Beyond Revenue

⚠️ Revenue growth doesn’t mean strong cash flow.

💡 Focus on net cash and ensure team understands the importance.

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Part II: Optimize Your Cash Flow

💵 Step 2: Speed Up Receivables

🔍 Review payment terms. Shorten them if possible.

🛠 Use tech tools (like Plooto and Stripe) to automate collection.

💳 Accept credit cards and other forms of payments. You can use Stripe, PayPal, and buy-now-pay-later platforms like Sezzle, Klarna and more. In our experience, the additional merchant fees is well worth the increase in sales and speed of collection.

🧾 Step 3: Slow Down Payables

🧠 Negotiate better terms with suppliers.

📆 Space out payment schedules without hurting relationships. Pay by credit card where possible, and use the 30-day interest free period on credit cards (but of course pay the credit card before due date!)

📉 Step 4: Track and Cut Unnecessary Expenses

🗒 List recurring charges. Eliminate any that don’t add value.

💡 Use apps (like FinDaily) to automate tracking and get visibility into cash movements.

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Part III: Build Cash Reserves

🏦 Step 5: Set a Cash Reserve Target

🧠 Have at least 3 months of expenses in liquid assets.

💡 Prioritize adding surplus cash to reserves each month.

🛠 Use tech tools (like LiveFlow and Fathom) to setup Dashboard and Reporting to monitor actively.

📈 Step 6: Reinvest Carefully

🚫 Avoid unnecessary capital investments until cash reserves are stable.

💸 If you must invest, focus on initiatives with quick returns.

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Part IV: Monitor and Adapt

📊 Step 7: Review Cash Flow Weekly

🗒 Have a weekly cash flow report to monitor burn rate and reserves.

🧠 Adjust budgets and spending quickly based on trends.

🛠 Again, LiveFlow is great for this.

🚀 Step 8: Automate and Delegate

🔍 Use software (again, like FinDaily) to monitor cash position in real-time.

👥 Assign a dedicated team member to stay on top of cash flow and raise flags early.

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Too overwhelming for you do the above on your own? Feel free to enquire about our Fractional CFO services at Think Accounting to lead this transformation for you.

Thank You For Reading. See You Next Time!

Think Team🙏