Peter Chambers works has an independent consultant for Australian small- and medium-sized businesses. One of his main goals is to help SMEs unlock cash flow so the funds can be used to invest in things such as innovation.
In a chat with Anthill Editor-in-Chief James Tuckerman, Chambers says there are seven things that drive or impact cash flow: growth, product price, the cost of selling goods, operational expenses, daily inventory, and money tied up in creditors and debtors (that last one counts for two).
Chambers talks about how he studies a business’ history so he can figure out its weak spots (too much inventory, for instance) and opportunities (tighten up collections by, say, five days), then help lay out a forecast for improved success.
“What I’m trying to do,” Chambers says, “is free up cash flow so that businesses can say, ‘We can go to the next level,’ and can say, ‘Hey, that hare-brained scheme we left on the drawing board, we can implement it because we have more cash flow to do it with.'”