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Insight from Peritius
Go beyond strategy. Deliver results with Peritius.
April 2012

Dear Colleague:

As Peritius Consulting continues to grow, we want to bring value through thought leadership articles in non-traditional areas. In this issue, we've enlisted our own Chief Financial Officer, Richard Lee, to provide insights on cash flow management.

As the economy continues to pose new risks and challenges, cash flow management becomes more critical for the viability of every organization. If you have questions or want to learn more, please reach out to Peritius at 847-808-9999.


Best regards,


Laura Dribin Werner
President & CEO
Peritius Consulting, Inc.

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Derived from the Latin word peritus

more expert, skilled, experienced

On October 1, 2010, Integrated Systems Management became Peritius Consulting.

The Art and Science of Cash Flow Management

By Richard Lee
Chief Financial Officer


It takes conscientious effort and careful planning to properly manage cash flow. In the down economy that we've been experiencing over the past 5 to 6 years, cash flow management becomes downright crucial: it is the lifeline of your business. History is littered with promising companies that never reach their potential (or go under) due to improper cash flow or fiduciary management.

Cash Flow Management Legendary college football coach Bear Bryant liked to say, "offense sells tickets; defense wins championships." This adage is true in the business world for enterprises of all sizes, where accrual revenue and income statements receive the "ooh's and aah's," while cash ensures that the company will be a going concern for another year.

As with many other practices in finance and accounting, a business owner must take some initiative and get a little creative for optimal results. Read how one small business owner made strategic and tactical changes when his cash flow situation became less than desirable in Entrepreneur magazine.

We have a few rules of thumb at Peritius Consulting when it comes to effective cash flow management:

  • Understand your business cycle - the "what" and the "why" related to the historical ebbs and flows
  • Plan and forecast both accrual and cash profit and loss ("P&L"), both short and long-term
  • Have a clear view of cash in and cash out. Using a master planning document or spreadsheet is helpful to get a "bird's eye view"
    • Cash in: by customer, understand their contractual obligations as well as historical behavior
    • Cash out: by vendor, understand your contractual obligation
  • Reconcile, note the variances against the plan, and adjust the overall plan or remainder of the year as appropriate
  • Ensure proper credit facilities are in place in case of missteps
  • Communicate, communicate and communicate - with upper management as well as line managers

Cash flow management is an exercise in risk management. It is necessary because businesses stretch and leverage their assets for greater return. When managed properly, it should be in complete sync with the invoices that go out and bills that come in. In accomplishing this synergy, the CFO in effect becomes a conductor in an orchestra that makes beautiful music.

About Peritius

Peritius Consulting is a management consulting firm that helps its clients execute their strategic plans. For over 23 years, Peritius has helped its clients navigate from vision to reality, allowing them to realize their strategic ROI. Please contact us to learn more about how we can help you deliver strategy in the most effective, cost-efficient manner.   |


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