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F-Suite - Cashflow Confidence

Rule No1: Don't run out of cash. The fundamental job of a CEO is to ensure the company doesn't run ou
F-Suite - Cashflow Confidence
By Deborah Okenla • Issue #7 • View online
Rule No1: Don’t run out of cash. The fundamental job of a CEO is to ensure the company doesn’t run out of cash - no cash, no company.
I remember when we first started making money I was managing our cash flow by looking at was coming in and going out of my account and writing comments on post it notes - sigh.
It took a legal battle where I lost a huge amount of cash for me to finally take financial responsibility for my company - something I felt insecure about, as numbers had never been my strong point. Following the incident I enrolled by self on to a programme, which supports social impact organisations develop their operational systems - I needed as much help as I could get.
I was paired with a mentor, Yusef, who helped me develop our cash flow management plan. During our sessions I learned about the impact of VAT and how to write sassy excel formulas. Simple stuff, but I didn’t know any of this … its not like they teach you about corporation tax in school.
Yusef, later connected me to my accountant, Archie, who has now become our company’s Financial Director. Archie has been a huge support and has helped me develop confidence in maintaining the company’s financial health. He supports us with invoices, cash flow audits, reviews, management accounts and strategy.
When COVID19 lockdown got enforced myself and Archie had a 8 hour cashflow management session. We reviewed every facets of the company, making decisions on what to invest and disinvest in. I later presented this within a Contingency Plan to our Advisory Board. Like many others, this involved revenue loss assumptions and cuts. Sequoia Capital shared in Coronavirus: The Black Swan of 2020 Memo:
A distinctive feature of enduring companies is the way their leaders react to moments like these. Your employees are all aware of COVID-19 and are wondering how you will react and what it means for them. False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action. Avoid this trap by being clinically realistic and acting decisively as circumstances change. Demonstrate the leadership your team needs during this stressful time.
From April we started executing on our Contingency Plan, centered around cashflow.
We still have a long way to go to ensure survival during this time, but I fundamentally believe it’s the four steps we took below that has enabled us to keep running:
1) Shortened cash flow operational cycle
  • Issuing invoices and payments before starting a project
  • Requesting 50% of more deposits on projects over a certain £
  • Introduced a late payment fee, as per guidelines
2) Launched new products and retainers
  1. Relaunched a service based on current market needs
  2. Launched a subscription service to earn recurring revenue
  3. Requested monthly payouts on projects with quarterly payouts
3) Increased client relationship management
  1. Contacted all clients to offer support during uncertainty
  2. Reached out to previous clients to scope future opportunities
  3. Informed clients on project delays and requested extensions
4) Carried out audits and team cuts
  1. Identified expenses to cut and softwares to cancel
  2. Reduced my CEO salary and reduced the team working days
  3. Team approved the move from employees to contractors
As mentioned above managing numbers is not my strength, which is why I have had to be very intentional in prioritising it as learning and development focus of mine. I’ve learned that is better to take out time to get to grasp with something you don’t understand as soon as possible, because their will come a time where you are faced with a crisis, which would have require preparation.
Had I not enrolled myself on to a programme and sought mentorship, I would have not been able to make decisive decisions regarding our cashflow status. Having a robust cashflow management plan, has allowed me to build a more deeper relationship with the financial health of my company and maintain a certain level of security - one I don’t take for granted.
I hope you found this email useful, let me know how you get on by using the hashtag #FSuite


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Deborah Okenla

Musings and resources for Founders transitioning into CEO roles.

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