Monthly Archives: July 2010

Managing your Cash Flow

What are the Cash Drivers in your Business? There 3 primary cash drivers in any business and 3 secondary drivers. The primary drivers are responsible for the overall amount of cash that you generate. The secondary drivers are responsible for the amount that you have access to at any given time. It is often the secondary drivers that are overlooked. We will focus on the secondary drivers in this article. What are the drivers? Primary Drivers: There are 3 primary cash drivers: Sales, Direct Costs and overhead Costs. Sales generate the cash and then our cost areas remove it hopefully leaving us with a surplus. However, unless we manage the secondary drivers, we often will have a much smaller volume of cash to work available to us. Secondary Drivers: Debtors (or Accounts Receivable), Inventory and Creditors (accounts Payable) are the 3 secondary drivers. Debtors is...

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You’re Selling “WHAT”?

What is your strategy, again? Or You're selling "what"? One of the key problems with this current financial crisis is that much of the problem has been created because of flawed strategies. For example: one of the first regional banks to crash in the USA had made a "killing” by providing 30 year mortgages to owners of trailer homes. The challenge was that trailer homes are typically worth very little of their purchase price after 10 years, and all was rosy until owners started to default on trailer home loans and there was insufficient equity to cover off the large amount of principal left to repay. The resulting snowball effect eventually brought down the bank and several of its regional associates. Now anyone with even a small amount of common sense could’ve seen that taking a 30 year loan on an asset with a 10...

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Globalism Requires a New Paradigm

If nothing else, the current crisis has clearly underlined the global nature of our economy. We are now, more than ever, influenced by the actions and reactions of our international partners. The flow-on effects of the sub-prime mortgage fallout in the United States has swept Europe, Asia, Australia and the Pacific. It is therefore, critical to understand how your business fits into the global economy. Even if you have no direct trade at a global level, there is a good chance that many of your customers and/or suppliers will be impacted. Even if the direct global impacts on your business are slight, the indirect impacts via changes in the national economy can be immense – decreases in consumer spending, reduced government spending, higher interest rates, higher unemployment, rising fuel and input costs can all have an impact. Knowing the extent of your "global exposure” is...

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