Oana Labes, MBA, CPA on LinkedIn: #business #finance #ceo | 483 comments (2024)

10 Strategic Cash Flow Mistakes and How to Fix Them.-------💎If you liked this post, you’ll love the strategic finance insights I publish weekly in my free newsletter. 💎Sign up here: https://bit.ly/4300Di8-------If you're making these, your organization and career might be at risk. 1️⃣ Mismatching Cash Flow Maturities↳ Utilizing short-term financing for long-term assets will lead to liquidity challenges.↳ Match up the cash flows on the assets being financed with cash flows on the debt2️⃣ Ignoring Foreign Exchange Rate Volatility↳ Trading in multiple foreign currencies can quickly erode profitability, liquidity, and leverage.↳ Design an active FX management strategy (forwards, options, etc) to safeguard against the adverse effects of currency fluctuations.3️⃣ Ignoring Interest Rate Volatility↳ Ignoring interest rate volatility can impact financing costs and cash flow predictability↳ Develop an appropriate financing strategy to manage exposures (swaps, options, etc) and protect cash flows.4️⃣ Misinterpreting Negative Operating Cash Flows↳ Negative operating cash flows aren't a negative sign unless they're due to underlying financial distress↳ Secure suitable working capital financing and avoid overtrading5️⃣ Relying on One-Time Positive Investing Cash Flows↳ Selling non-redundant assets to fund ongoing operating deficits can hide structural challenges↳ Resolve underlying profitability issues early and seek sustainable financing solutions6️⃣ No Growth Working Capital↳ Failing to adequately finance growth working capital can slow expansions and deplete cash reserves↳ Negotiate suitable working capital financing to fund current asset growth7️⃣ Mismanaging Payment Terms↳ Misaligning terms between suppliers and customers can lead to cash flow shortfalls and liquidity issues ↳ Negotiate terms that complement your cash flow cycle and secure backup financing 8️⃣ Failing to Leverage Cash Management Tools↳ Manual cash management exposes organizations to errors and suboptimal cash positions ↳ Integrate modern cash flow management tools including automated receivables and payables for improved cash flow visibility and control9️⃣ Neglecting Cash Flow Forecasting↳ Lack of comprehensive cash flow forecasting will prevent opportunities and introduce undue risk, threatening business viability↳ Use both short term rolling & long term cash flow forecasts 🔟 Ignoring Long-Term Strategic Implications of Cash Flow Decisions↳ Short-term cash management decisions significantly diminish growth ↳ Balance immediate liquidity with long-term vision to align day-to-day needs with long term goals ----▶Get my on-demand video course with 5* reviews: The Cash Flow Masterclass: https://bit.ly/3NZJvSO ➕ Follow me for strategic finance, business, and cash flow insights📌Grab my viral finance cheat sheet pack: https://bit.ly/3T3CtPm♻ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share with your network ♻

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100 Business KPIs.Because what gets measured gets done. Here are 25 x 4 to choose from, measure, and benchmark.To help your organization achieve its most strategic objectives.▷▷▷ Let me know in the comments: which of these are you regularly monitoring?➡️➡️➡️ If you’d like a full resolution PDF copy, please help me spread this free resource. Then download it here: https://lnkd.in/esMmdD5W➡️➡️ Like, Comment, Share with your network.➡️ And make sure you follow me so you don’t miss out on the next resource!▷ There are many ways to segment business measures and turn them into KPIs. ▷ Here are 4 essential business dimensions to consider:1. Finance KPIs2. Accounting KPIs3. Investing KPIs4. Cash Flow KPIs▷ Let’s break them down one by one:1. Finance KPIs:▶ measure the financial health and performance of the business. ▶ provide a snapshot of how well the company is utilizing resources to generate earnings and cash flow.▶ help companies make informed decisions on investments, cost management, and strategic planning 2. Accounting KPIs (some overlap exists with Finance KPIs):▶ measure the efficiency of the business operations, and the effectiveness of accounting processes, and internal controls. ▶ essential for operational planning, financial reporting, and ensuring the integrity of financial data.▶ help improve short term cash management, financial reporting accuracy, and compliance3. Investing KPIs▶ measure the performance of investment activities, focusing on returns and strategy effectiveness ▶ critical to assess how well invested capital is contributing to growth and strategic objectives.▶ help optimize investment portfolios, strategic asset allocations, and risk vs. return investment profiles4. Cash Flow KPIs▶ measure liquidity, cash management effectiveness and business risk ▶ critical to ensure the availability of sufficient cash to fund operations, invest in opportunities, and meet obligations.▶ enable companies to better manage working capital, anticipate cash shortages, and plan for sustainable financial growth.What would you add?PS. My favorite KPI is the Cash Flow Debt Service Ratio. What’s yours?-------➡️➡️➡️ Like, Comment, Share and get your full resolution PDF copy: https://lnkd.in/esMmdD5W ➡️➡️ Follow me to get my future posts.

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Learn to Manage Cash.Here's why:To seize growth opportunitiesTo protect against critical business risksTo avoid financial distress and loss of business valueTo maximize shareholder value and return on investment.👉 Let me know in the comments, how do you forecast cash flow? 🎯 If you’d like a full resolution PDF copy, please help me spread this free resource.➡️➡️➡️ Like, Comment, Share with your network. Then download it here: https://lnkd.in/eYRG-QnG➡️➡️ And make sure you follow me so you don’t miss out on the next one!🎯 Cash comes into a business from 3 main sources:>> Operations>> Investments>> Financing🎯 Cash 1.0 is optimizing AR, AP and Inventory terms and turnover 🎯 Cash 2.0 is working on:>> Cash Flow Forecasting Techniques>> Effective Debt Management>> Capital Expenditure (CapEx) Cash Flow Optimization🎯 Here are 4 critical reasons to remember for managing cash:1️⃣ Seize Growth Opportunities:⚫ you need agility to capitalize on acquisitions, expansions, or innovation ⚫ cash reserves may not be sufficient, so having a strategy to attract the incremental cash you need will allow you to take quick action on opportunities and give you a competitive edge.2️⃣ Protect Against Critical Business Risks:⚫ cash acts as a financial buffer against economic downturns, demand fluctuations, or supply chain issues⚫ taking steps to ensure sufficient excess cash will help ensure your operational stability and strategic focus during unforeseen challenges3️⃣ Avoid Financial Distress and Loss of Business Value:⚫ effective cash management will prevent cash flow shortfalls, which are a leading cause of business failure.⚫ the worst time to get other people's money (bank, investors) is when you actually need it⚫ planning ahead will help you meet short-term liabilities (payroll, suppliers, debts) and avoid eroding business value and reputation.4️⃣ Maximize Shareholder Value and Return on Investment:⚫ strategic investments and operational decisions that drive long-term growth and profitability require advanced cash flow planning⚫ managing cash effectively will always position companies favorable to generate and provide superior returns to shareholdersWhat would you add?PS. What was your favorite part?---➡️➡️➡️ Grab my free strategic finance sheets: https://lnkd.in/e4T6-6-5➡️➡️ Like, Comment, Share for full resolution PDF copy of this cheat sheet. You can download it here: https://lnkd.in/eYRG-QnG➡️ Follow me to know about my future posts

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I was named #3 in in the Top 10 Linkedin Female Canada.But I wasn't born in here...I'm an immigrant.I started posting about Finance & Accounting on Linkedin a year ago.Since then I reached over 100 million people with my posts & infographics.Over 326,000 of you here follow me, and 40,000 read my weekly newsletter.Linkedin has changed the game for me.A year ago I was an entrepreneur on a mission.Today I am an entrepreneur on an even bigger mission.And I'm representing for millions of professional girls and women.Because if you can see her, you can be her!Thank you Favikon for this recognition. And congratulations to the inspiring ladies in this fantastic lineup. Arlene Dickinson, Katy McFee, Dora Vanourek,Erica Rankin,Maame De-Heer,Rita Orji, PhD, Chrystia Freeland,April Dunford, Gabrielle B.--------➕ Follow me for strategic finance, business, and cash flow insights📌Grab my viral Finance infographics: https://lnkd.in/eC_ihy6y♻ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to inspire your network ♻

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You can’t manage what you don’t measure. And you can’t measure what you don’t understand. The Revenue to Cash waterfall will help you visualize,So you can understand, measure, and manage your performance.--------⏬⏬⏬💎Increase your impact and influence. Get this sheet and many other finance gems in my weekly newsletter💎 Sign up and get a bonus pack as a welcome gift: https://lnkd.in/eC_ihy6y⏬⏬⏬--------🎯 The Revenue to Cash waterfall chart is a strategic tool that breaks down the story of your organization’s liquidity from opening to closing balance.✓It helps you connect the Income Statement and Balance Sheet with the Cash Flow Statement. ✓ Each step can reveal efficiencies or red flags that may impact financial health. 🎯 Here’s how to put it together:➡️ Opening Cash Balance: start with the initial cash available to the business.➡️ Revenue: add total revenue from goods sold or services provided as this is the influx that triggers the waterfall.➡️ Cost of Goods Sold (COGS): subtract the direct costs attributable to the production of the goods sold.➡️ Depreciation and Amortization: subtract this non-cash expense that reflects the consumption of assets over time. We’ll add it back later.➡️ Operating Expenses: subtract the costs necessary to maintain the business's operational capabilities➡️ Interest Expense: subtract the cost of borrowing ➡️ Tax Expense: subtract the cash paid for taxes ➡️ Net Income: arrive at the net income for the period, which is also the starting point for making critical adjustments that will link it to the closing cash balance for the period➡️ Depreciation and Amortization (Adjustment): add back non-cash expenses previously subtracted➡️ Changes in Working Capital: → subtract the cash still not collected from sales revenues→ subtract cash paid for purchases not yet sold and sitting in inventory→ add the cash not yet paid to suppliers and other third parties.➡️ Investments: subtract net investments for long-term assets➡️ Net Payments for Debt and Equity: subtract net cash paid for debt or equity➡️ Closing Cash Balance: calculate the ending point of the waterfall, representing the final cash position for the period→ Which step do you find most challenging?----------------------🎯 This is a snapshot from my 5*, on-demand video course The Cash Flow Masterclass. Visit my website to enroll for lifetime access or watch a free webinar to learn more strategic cash flow insights. ----------------------🎯 Join 100 million and Follow Me for Strategic Finance & Business Insights▶Visit my website for 5* masterclasses, checklists and cheat sheets🎁 Subscribe here for your welcome gift: https://lnkd.in/eC_ihy6y♻ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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The global economy is expected to remain uncertain throughout 2024, with over half of chief economists anticipating a weakening. How about you? How do you feel about the economy in 2024?

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The Cash Flow Cheat SheetBecause Cash is not King 👇Cash Flow is. --------🎯𝐇𝐞𝐥𝐩 𝐦𝐞 𝐬𝐩𝐫𝐞𝐚𝐝 𝐭𝐡𝐞 𝐤𝐧𝐨𝐰𝐥𝐞𝐝𝐠𝐞 𝐰𝐢𝐭𝐡 𝐭𝐡𝐢𝐬 𝐅𝐫𝐞𝐞 𝐂𝐡𝐞𝐚𝐭 𝐒𝐡𝐞𝐞𝐭: 𝐥𝐢𝐤𝐞, 𝐬𝐡𝐚𝐫𝐞 𝐚𝐧𝐝 𝐜𝐨𝐦𝐦𝐞𝐧𝐭!⏬⏬⏬💎Get this cheat sheet and many others in my weekly newsletter💎 Sign up and get a bonus sheet pack as a welcome gift: https://lnkd.in/eC_ihy6y⏬⏬⏬--------Cash Flow intelligence is critical for business success.♦️ It helps you identify potential cash shortfalls.♦️ It helps you take proactive measures to address them.♦️ It helps you strategically manage cash flow to support long-term goals.♦️ It helps you avoid insolvency and financial distress.👉 𝐇𝐞𝐫𝐞 𝐢𝐬 𝐰𝐡𝐚𝐭 𝐓𝐡𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐂𝐡𝐞𝐚𝐭 𝐒𝐡𝐞𝐞𝐭 𝐢𝐧𝐜𝐥𝐮𝐝𝐞𝐬:🎯 The 5 Types of Cash Flows compared, with their components🎯 The Direct vs. Indirect Cash Flow comparison🎯 10 critical Cash Flow Ratios from which to choose your KPIs🎯 The Cash Conversion Cycle Diagram + Formula🎯 The 3 Main Cash Flow Drivers and 30 sub-drivers🎯 The difference between EBITDA and (Operating) Cash Flow🎯 The 5 Steps to Manage your Cash Flow🎯 The Cash Inflows and Outflows🎯 The relevant and incremental Cash Flows in Capital Budgeting🎯 The 16 Cash Flow Mistakes to Avoid🎯 The Revenue to Cash Waterfall🎯 The 15 Benefits of Effective Cash Flow ManagementUse this Cheat Sheet to improve your cash flow knowledge.And help others to the same.What would you add?--------------🎯 Join 100 million and Follow Me for Strategic Finance & Business Insights▶Visit my website for 5* masterclasses, checklists and cheat sheets🎁 Subscribe here for full res cheat sheet: https://lnkd.in/eC_ihy6y♻ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share and help your network

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EBITDA gets adjusted all the time. But Adjusted EBITDA is still not cash. ⏬⏬⏬💎Get this infographic and many more strategic finance gems in my weekly newsletter. Sign up for The Finance Gem 💎 and get my cheat sheet pack as a welcome gift here: https://lnkd.in/eC_ihy6y⏬⏬⏬Here are the 20 most common adjustments to be aware of: 1// Provisions and ReservesGuarantees. Future tax obligations. Asset Retirement Obligations. Asset impairment.🎯 These are potential future cash payment obligations, but while they shouldn’t reduce your current EBITDA, the future changes in their associated balance sheet accounts might.2// Non-operating income🎯 This is usually passive income which isn’t related to your company’s core operations.🎯 If your company isn’t actively in the business of generating that income, it shouldn’t be part of your EBITDA.3// Unrealized gains or losses🎯 These are increases or decreases in the value of an asset or a liability that you haven’t yet sold or settled.🎯 Paper gains and losses don’t belong in EBITDA.4// One-time revenue or expenses🎯These are the result of non-recurring transactions.🎯 If they aren’t repeatable and the objective is to assess the economic value of recurring cash flows, they may not belong in EBITDA.5// Foreign exchange gains or losses🎯 These may be the result of foreign exchange transactions outside your company’s core operations. 🎯 Alternatively, if your business is carried out in international markets, FX gains and losses definitely belong in your company’s EBITDA.6// Goodwill impairment7// Asset write-downs8// Litigation or insurance expenses outside the regular course of business.🎯 These are the result of non-recurring transactions such as one-time lawsuits, large financing deals or outlier commercial contracts.9// Excessive Owner compensation 10// Share-based compensation11// Below Market Compensation12// Personal Expenses13// Personal Travel and Entertainment Expenses14// Pension Expenses15// Professional Fees16// Aggressively expensed/capitalized items17// Fair Market Rent18// Tax Minimization Strategies19// Severance Costs 20// Percentage Of Completion Revenues🎯 This includes the revenues you recognized on long-term contractual engagements based on the percentage of costs incurred relative to the total estimated contractual costs. 🎯 Your high interim EBITDA on Percentage of Completion contracts is always at risk of reversing into losses resulting from underestimated project costs.➡️➡️➡️ Get the complete list breakdown in this Saturday issue of The Finance GemWhat would you add?______________________________________________________▶Visit my website for 5* finance masterclasses, checklists and cheat sheets➕ Follow me for strategic finance, business, and cash flow insights📌Grab my viral Finance infographics: https://lnkd.in/eC_ihy6y♻ 𝐋𝐢𝐤𝐞, 𝐂𝐨𝐦𝐦𝐞𝐧𝐭, 𝐑𝐞𝐩𝐨𝐬𝐭 to share with your network ♻

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