The document discusses the importance of cash flow planning and key performance indicators (KPIs) for growing businesses, providing examples of long-term and short-term cash flow forecasts with metrics and financial projections that investors look for to demonstrate a company's ability to achieve its financial goals. It emphasizes having a detailed long-term cash flow projection and a 13-week short-term cash flow forecast with weekly variance analysis to manage liquidity and spot trends.
2. 1 Cash Planning
2 KPI’s and Managing Growth
3 Metrics to Assist with Financing
CONTENT
overview
1
What Metrics are Investors
Looking for?
Long and Short term
How to Choose KPI’s
4. Paying Bills with?
3
Gross Profit
Sales less Costs of Sales
Net Income
Gross Profit less Operating
Expenses
EBITDA
Earnings Before Interest
Taxes, Depreciation &
Amortization
CASH IS KING
5. Cash Forecasting
Short Term vs Long Term
4“Plans are Useless, but planning is essential” Dwight D
Long Term
Think:
Basketball Coach Game Plan
Watch film
Study w staff
Talk to team
Set game plan
13 Week
Think:
In Game Adjustments
Changing Defense
Injury
Time remaining
Small lead
0
2
4
6
8
10
Leanest
Period
Week/Month
9. Detailed Sales Projections
8
Detailed Balance Sheet
Detailed Expense Projections
By month for 3 to 5 years
Convince Investors you can do it
Detailed Cash Flows
11. 13 Week Cash Flow Forecast
Crucial Elements
10
A powerful management tool, the 13-Week Cash Flow projection, refreshed weekly, should be used by all companies, both
healthy and distressed to assist with managing and anticipating short-term liquidity needs.
13 Weeks
Maintains accuracy, but long
enough to react
Weekly
Avoids “intra-month” surprises
Beginning vs Ending Cash
Reconciles weekly
To receive a 5 page whitepaper discussing the mechanics, send an email to info@advancedcfo.com with “13Week” in the subject line.
Liquidity
tracks available liquidity
weekly
Major Categories
naturally grouped, summarized
Specific Unusual items
Variance Analysis
sufficient explanations
Weekly Accountability
management tool
Graph
Simple cash & liquidity trending
12. 1 + Cash In
- Cash Out
= Operating Cash Flow
2 Beginning Cash
+/- Operating Cash Flow
+/- Loan Activity
= Ending Cash
3 Ending Cash
+ Available Borrowings
= Total Liquidity
13 Week Cash Forecast Elements
overview
11
13. 13 Week Cash Forecast
12
OPERATING CASH FLOW
+ Inflows
- Outflows
Operating Cash Flow
NET CASH BALANCE
+ Beginning BANK Cash Balance
+/- Operating Cash Flow
+/- Loan Activity
Ending BANK Cash Balance
- Outstanding Checks
Ending BOOK Cash Balance
LIQUIDITY
Ending Cash Balance
Less: Outstanding Checks
Net Cash
Total Revolver Availability
Less: Revolver Usage
Available Revolver
Net Liquidity
13 Column Forecast - 1 per Week TOTAL
23. Paying Bills with?
22
Gross Profit
Sales less Costs of Sales
Net Income
Gross Profit less Operating
Expenses
EBITDA
Earnings Before Interest
Taxes, Depreciation &
Amortization
CASH IS KING
24. Where do I Start?
Revenue
Cost of Goods Sold or Cost of Sales
Gross Profit / Gross Margin
Operating Expenses
Operating Income or EBITDA
Net Income
25. Most Companies?
• Annual Sales Growth – ARR – MRR
• Gross Profit Margin
• EBITDA Margin
• Net Income Margin
• Burn Rate
• Sales per Headcount
29. 28
Make sure you have a
believable map that shows how
you are going to accomplish
your financial goals and solid
KPI’s that demonstrate you
know how to run your business
If you want investors to put
money into your
company…they have to believe
you can do what you say you
can do
&
Conclusion
Money & Maps
30. 23rd of March, 2016
Thank you for being here today
Presenter:
JB Henriksen
Partner, Advanced CFO Solutions