I realize each of you has a clear understanding of cash flow The purpose here is to have a different discussion about cash, not in your routine way, but in the context of this BOD format I hope you get some new perspectives and ideas about sources and uses of cash… First thing is, you SELL something, a product or service! Is it something your customer demands or values? Do you make a profit? A good profit? Any profit? Gentex example – sale-collect-invest-develop-sell MORE $$$
When Alan Mulally arrived at Ford Motor in 2006, securing a $27 billion line of credit was his first order of business… Private placements can include senior debt, mezzanine debt, subordinated debt…the key is having your advisor drive an auction process… Do you offer discounts? Accelerate payments by calling your customer and asking them “How should I report your payment to D&B, prompt or slow 60 days?” Tax incentives can complement a Brownfield strategy versus a Greenfield strategy…
Fixed Costs - costs that must be paid whether or not any units are produced. These costs are "fixed" over a specified period of time or range of production, i.e. administrative, selling and certain labor costs Variable costs - costs that vary directly with the number of products produced, such as the cost of the materials needed, or incremental labor costs
Many companies use their financial strength as a tool to win new business or set favorable terms… As a buyer of raw materials, or as a means of co-investing with suppliers to improve your business… Seize the moment for an acquisition or new product…
Lower market risk means more buy/sell opportunities Lower credit risk means fewer bad customers and suppliers