Insights & Blog | Maven Capital Partners

Cash Flow Management: Practical tips for confidence | NPIF Maven

Written by NPIF | Mar 10, 2020

As Portfolio Director, Karen De Meza, supports Maven’s portfolio businesses post investment, conducting regular meetings with the management team to help the business develop appropriate strategy and governance to enable it to grow effectively.

Any business that has just secured new funding should make sure it clearly understands both its financial obligations, but also what the funder needs from them. If both parties really understand each other well, then the relationship is much more likely to succeed in the long run. Here are three practical tips to help you to inspire confidence from an investor:

Be pro-active with cash management

  • Operate a 12-week rolling cash flow
  • In pre-revenue businesses understand what cash runway you have available
  • Consider the timeliness of commercial payment terms from customers
  • Be smart with cash collection processes
  • Pay attention to your credit rating to ensure that your credit limits and payment terms with suppliers are fully optimised.
  • Set milestones and measure against plan; constantly review productivity and overheads, taking corrective actions to conserve resources where under performance exists.

Be a solution provider

If you have taken the steps to monitor progress and set KPI’s you will identify quickly if your plan is not on track.  If that happens then the worst thing you can do is to procrastinate.  It will be a far more productive to formulate a proposed amendment to the plan, be decisive, take corrective action and use that as the means to communicate a message to the investor that you are in control and taking steps to get back on track.

Transparent Communication

Treating your investor as a partner is the best policy.  If the business plan is not quite working, being open about that is the best policy.  Maven will have encountered this scenario on numerous occasions and will be able to provide assistance to facilitate you to take corrective action..

In summary, your main focus is on cash, if your plan goes awry take commercially-based, course-corrective action quickly, communicating how and why to your investor along the way, that will promote confidence.  By comparison, the likelihood of receiving follow-on commitment from an investor will be very low, if you pretend everything is ok when it isn’t, or blame everyone or everything else (e.g. customers, the Government, the strength of the dollar, Brexit or the Coronavirus) for your under-performance with no requisite actions or accountability, just make promises you can deliver.

If your business is in need of finance to help unlock its growth potential, NPIF Maven Equity Finance may be able to help. Contact Maven’s local team today on 0161 233 3500.