I was introduced to Ecocleen South West and the owner Jim Humphrey by his accountant in 2018. The business was growing exponentially but there was not enough information available to track profitability and manage cashflow.
Initially quarterly bookkeeping (in Xero) had been sufficient, but the business had grown to a point where more frequent and detailed monitoring was required. In addition to this Jim needed to be able to compare the profitability of different activities to his initial estimates. Most importantly, although the accounts tracked the expenses incurred there was no forecast of the effects of future sales growth on cashflow.
My first priority was to understand what was happening to the profit and cash generated by the business. An initial review revealed that the business was generating healthy levels of profit and was growing on sound footings.
While sales and profit were growing the timing of payments was putting a strain on cashflow. Improving credit control efforts was a quick and easy way to improve this. A 3 year forecast showed the impact of further growth on cashflow and indicated the level of finance required to give the business the life blood required to take advantage of new opportunities.
Armed with this cashflow forecast Jim secured the funding he required to smooth the challenges during 2019 and the business continues to grow. Now that he has good information he can compare actual performance to forecast and be aware of his future liabilities. In addition to this we identified key actions to reduce the financial impact of this growth, for example how best to sequence new projects to spread the cashflow change.
You can read and download the case study here: Case Study: Managing Cashflow