We’ve just had our first year and our cashflow was very bumpy. What can I do about it?

We’ve just had our first year and our cashflow was very bumpy. We seemed to have big dips and I’m not sure why. We were doing the same thing. What can I do about it?


This year has kept a lot of people up at night with higher than average volatility on the stock market reflecting the turmoil in Europe and the United States.


The first thing for you to do is compare your cashflow on a month-by-month basis with the purchase patterns three months before and three months after.


This will enable you to examine the profile of customers with the impact of your order cycle and links to cash in the till.


Next you need to sit down with your production and sales team and review that order book pattern and link it up with the anecdotal stories that come from those most in touch with your supply chain (the upstream experience) and those most in touch with the people using your products and or services (the downstream experience).


This is the only way to prune your plant and production to deliver a bumper crop of new business rather than fear more bumps in the night as the market shifts on the basis of price or performance without your knowledge of the changing patterns of distribution.


In light of those reviews, take a very close look at both your competitors and innovative companies that may be substituting a different and more immediate value proposition to your immediate customers – what is referred to as sources of disruptive innovation.


You may find that you need to reconsider your own business and marketing plans to iron out those bumps and get your cashflow moving ahead of the competition.


Finally, make a chart that brings all this together with one column being the great months and the other being the big dips.


Use this to make trial calls to the customers in the good times to check that you will still keep their business as you respond to the problems exposed in the dippy periods.


Otherwise you will find that the cashflow reflects your concerns rather than those of your place in the value chain.


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