What are our financial statements telling us?

How well do your team understand your Cash Conversion Cycle? Or could they take the Acid Test on a potential new customer?

What are these financial metrics, and could they help your business charge more? Get paid quicker? Avoid bad debt from offering credit to weak customers?

The ability to connect and compute an understanding of financial performance based on data published in companies’ financial statements can be hugely useful. Owners, managers, and professionals looking to increase their business understanding and performance benefit from having this understanding of what the numbers are telling them.

For example, Cash Conversion Cycle reflects the length of time it takes to recycle working capital in a business. Essentially this is the time taken to recycle a given amount of money from investing it in production through to payment for the finished article hitting your bank account. 

The quicker this is, the harder your capital can be put to work.

Slow payers hit this hard and means your company needs more funds available to conduct the same amount of business, but are your sales team aware of this when agreeing extended payment terms or turning a blind eye to customers with weak credit scores?

This isn't just a science for bankers, investors of your finance director.  Financial skills for non-financial managers can quickly enhance your organisations performance by enabling a wider range of individuals across the organisation to truly grasp the numbers they are working with and the impact of non-financial decisions they make.

If the questions explored above have got you thinking about the skills you and your colleagues may need to develop, I would love to have a conversation about upskilling and how straightforward improvements can drive bottom line improvement for your organisation.