Cómo optimizar su ciclo de flujo de caja

de lectura

Every business owner knows it's better to be on the upside of cash flow. However, the critical significance of cash flow management is often underappreciated. Whether a business is large or small, cash flow could ultimately lead to its success or demise. By setting an effective cash flow management policy and holding the right people accountable at each stage of the cash conversion cycle, senior managers can spend less time micromanaging the cash flow process and more time strategizing and implementing value-enhancing initiatives to grow their companies.

Optimizing cash requires balancing many things, including pricing, vendor costs, capital structure, and working capital policies. If one of these four pillars falls, a company may not generate enough cash flow to survive, irrespective of the demand for its products or services. Therefore, it's imperative for business leaders to understand the many different individuals and departments who are responsible for proper cash flow management.

Understand the operational workflow

It all begins with visibility into the operational workflow, from procurement (purchasing) to collections.

As an example, let’s take a look at the operational workflow for a fictional wholesale manufacturing company, ABC Widgets, utilizing just-in-time inventory (i.e., no storage time) to produce and sell consumer products:


  1. Order: The customer places an order from ABC Widgets, which triggers the company’s purchasing team to open a purchase order for materials from a supplier. The materials are shipped from the supplier to the company.
  2. Assembly: ABC Widgets receives the materials and starts the assembly and manufacturing process.
  3. Inventory: The assembled products are now considered finished goods, and they are transported to the customer.
  4. Collections: The customer receives the products and has 30 days to pay, according to his credit terms with ABC Widgets.

Optimize timeline to improve cash flow

After understanding the operational workflow, the cash conversion cycle should be optimized at key points and processes. The objective is to strategically adjust the timeline so that cash is received quicker than it's disbursed.

There are opportunities to improve your position at each stage of the cash conversion cycle. Let's go back to the example of ABC Widgets.

  1. Order: ABC Widgets’ purchasing team should have established favorable credit terms with the supplier, such as extended payment dates, later stage transfer of ownership and discounts for paying early. Establishing those terms from the beginning of the supplier relationship can help the company keep cash in hand longer while waiting for material orders to arrive.
  2. Assembly: ABC Widgets’ operational team should streamline the processes from materials receipt to freight-out to reduce or eliminate the time that the materials and finished goods spend in the assembly line or in stock. Keeping a minimum inventory of materials on hand is one way to manage this. Ideally, all materials should be ordered to arrive at their respective assembly times so that missing parts don’t hold up the manufacturing process. The purchasing team needs to manage lead time and should consider adjusting material order timelines to account for vendor processing time.
  3. Inventory: Similar to assembly, the shipping timeline should be limited in order to accelerate the completion of the sales process and ultimately the collection of cash from the customer. In some cases, it may even make sense to pay slightly more for faster shipping so that you can collect payment sooner.
  4. Collections: The sales (or credit) team should set terms with customers to collect as soon as possible, preferably at point of sale. When credit terms are provided, the number of days to pay should remain limited. For example, expedite cash collections by establishing customers on ACH payments instead of checks, thus reducing time of sending and depositing.

Use metrics to enforce proper cash flow management

With the groundwork now set, proper cash management should be enforced. While the purchasing department sets the vendor terms, the accounts payable department is responsible for disbursing funds in line with negotiated terms. If there are no discounts or benefits offered by the vendor for earlier payments, simply don't pay early. Conversely, the accounts receivable department is responsible for collecting on-time or earlier than the specified terms from customers.

Establishing and monitoring management metrics surrounding cash flow can help you to hold the right individuals or departments accountable. Some metrics you may want to measure include:

  • Number of days for credit terms in customer contracts – Sales or credit department
  • Number of days for payment terms in vendor contracts – Purchasing department
  • Percent of on-time or early vs. late customer collections – Accounting department
  • Percent of on-time vs. early vendor payments – Accounting department

Contact us to learn more about how you can improve cash flow at your company. Remember, cash is always king for financial survival.

Ian Goldberger, CPA, es socio de Servicios de Consultoría Empresarial, Servicios de Asesoramiento en Transacciones de Kaufman Rossin, una de las 100 principales empresas certificadas de contaduría pública y asesoramiento en EE. UU.

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