Improper management of cash flow will strangle your business.


Q: Can you give me some ideas on how to manage the cash flow in my business?

A: Know your numbers.


  1. Follow some key metrics
    1. To manage cash you need to know the key metrics for your business
    2. Watch them closely
      1. As a PM I always knew projected monthly billings and costs
    3. Project them, track them and adjust for them
  2. What are the 7 key metrics for contractors
    1. Project monthly billings
    2. Project monthly project costs
    3. Projected project gross margins – Project Billings minus Project Costs
    4. Overhead burn rate – how much it costs to keep the lights on
    5. Average Accounts Receivables aging time – the average time from invoice to cash in the bank
    6. Sales cycle – the average time from estimate to actual billings
  3. Use the numbers to adjust and plan your business
    1. Make projections for the upcoming months / year
    2. Track the actual versus projections
    3. Use the results to adjust accordingly
      1. Increase billings and decrease cost to make adjustments

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