When they say, "it's not about the money; it's ALL about the money..."

06 March 2018

I was recently in a client meeting and was shown a set of management accounts that had been prepared with such sharpness and precision that running a hand over them might have resulted in lacerations. The beauty of the layout might have featured in any modern art show (for bean counters). A joy to behold.

I asked about the cash flow forecast, the response I received was furrowed brows.

Apparently, there had never been a need to prepare them as the shareholders and board had never asked for them. The business was profitable and "in the money".


So we spent 10 minutes scraping the budget into 12 columns and bashing in some capital spend (gulp!) and some other balance sheet spends (including a fairly "chunky monkey" of a tax bill).

And what do you know… did it come to pass that in 6 months' time that the money cupboard was bare? Indeed it did!

Therefore, we had some surgery to make to the spreadsheet. The projects that were CapEx needed re-phased. The pay out of some liabilities was spread, and the timing of some billing was brought forward.

Sorted. This time.

The business had never borrowed. It had never made a loss. It barely knew the banking relationship manager.

An uncomfortable 3-month spell juggling suppliers' demands (risking continuity of supply, discount arrangements and reputation) and potentially unsettling staff was averted. In fact, 3 months' of "jiggery pokery" may have had a lasting damage way beyond that time period.

It struck me that there are (based on some rather dated stats) up to 5 million start-ups and partnerships who turn a good idea into a living wage (many are personal service companies, yes) and then turn that living wage into a successful small company.

They generate a fortune in taxes and in bank and card fees.

They are good at what they do, not necessarily at managing the cash.

Surely, there is something to be done to make it all a lot easier for them... maybe with some bank support and investment...

For more information, contact Jim Muir (consulting@aab.uk) of the AAB Consulting Associate Network, or your usual AAB contact.

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