What’s in your playbook?

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What’s in your playbook?

By Anna MaskerIn standard23rd September, 2016


It’s football season, and with it comes the donning of team jerseys, trips to football stadiums, and Monday-morning quarterbacking.

It got me thinking about team playbooks.  Guarded like gold, and critical to a team’s success, a player wouldn’t be allowed on the field without having memorized all the plays.

Yet, many businesses operate every day without a playbook- especially when it comes to cash management.  Used to “winging it” and somehow managing through crisis after crisis, many companies don’t know (or forget) there is a better way.  It’s a playbook– or in business terminology, a forecast and scenario planning.  One component of that playbook is a cash management strategy.

It is rare that we see a company that doesn’t have issues with cash flow, yet many don’t have a plan or the right person making the decisions on who is to be paid.

What should be part of your cash management playbook? Here are our recommendations:

  1. 6-week cash forecast: A 6-week cash forecast maps out the cash receipts and disbursements and ending cash balances for the next 6 weeks.  This gives you the short-term forecast to spot issues ahead.
  2. Weekly review of the 6-week cash forecast:  There are two components to this review process:  first, review the 6 week forecast and address weeks that have low or negative balances, and secondly, look at the prior week’s predictions compared to what actually happened.
  3. 13-week cash forecast: Similar to a 6 week forecast a 13 week forecast gives you better visibility to the entire quarter.  The quarterly forecast allows you to see large upcoming payments such as quarterly taxes and large payments with enough time to plan for them.
  4. Vendor management strategy: Not only is it important to predict cash balances, it’s also important to have a strategy of which vendors need to be paid first, and a communication strategy if you are going to pay late.
  5. Designated disbursement days: When you have a cash management playbook in place, the last piece is executing it– meaning cutting the checks on designated days, only when you know that you have the cash to do so.

Just like there are short plays and long plays, you have long and short term views of your cash flow, which gives you the maximum amount of time to come up with a game plan to address any shortfalls.

If you ever need help putting together your cash playbook– give us a call, we’d be happy to help!

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