This is a simple measure I try to foist on all my SME clients, the Monday morning “NCC meeting”. It is just as important to larger businesses, but my clients are mostly SME’s.
It involves a meeting of the key cash sensitive executives, (generally the MD, Beenie, Sales and Purchasing), and tabling a daily record of cash in and out, and rolling forecasts for the week and month to come. The participants table the decisions and expectations of the next week, and month, and looks at the cash consumption of week past. Very simple, 10 minutes when the routines are established, but a very valuable 10 minutes, as it surfaces potential cash problems before they bite .
Measuring the cash flow of a business is a bit like going to the doctor, the first thing he measures is your pulse and blood pressure, if these are OK, chances are the patient is OK, if not, look further. The NCC is the commercial equivalent, and anything that shows up here as being out of expectations requires further examination.