Managing Cash Flow and KPI’s for your

Growing Business

1 Cash Planning

2 KPI’s and Managing Growth

3 Metrics to Assist with Financing

CONTENT overview

1

What Metrics are Investors Looking for?

Long and Short term

How to Choose KPI’s

Why do we forecast &

manage cash?

2

Paying Bills with?

3

Gross Profit Sales less Costs of Sales

Net Income Gross Profit less Operating

Expenses

EBITDA Earnings Before Interest

Taxes, Depreciation &

Amortization

CASH IS KING

Cash Forecasting Short Term vs Long Term

4 “Plans are Useless, but planning is essential” Dwight D

Eisenhower

Long Term Think:

Basketball Coach Game Plan

Watch film

Study w staff

Talk to team

Set game plan

13 Week Think:

In Game Adjustments

Changing Defense

Injury

Time remaining

Small lead

0

2

4

6

8

10

Leanest

Period

Week/Month

5

CAPACITY

PLANNING

EARLY

WARNING

SYSTEM

INVESTOR

REQUIREMENT

Most importantly

LACK OF

PLANNING Most companies forecast LT

profitability but not working

capital and cash

WHY DO IT?

LONG TERM Cash Forecast Game Planning

Know LT Cash

Timing Needs

Isn’t my

sales

projection

enough for

Long Term

cash?

6

7

Your Long Term Forecast is Your Cash Flow Map

Detailed Sales Projections

8

Detailed Balance Sheet

Detailed Expense Projections

By month for 3 to 5 years

Convince Investors you can do it

Detailed Cash Flows

9

CONFIDENCE EARLY

WARNING

SYSTEM

INVESTOR

REQUIREMENT

Most importantly LACK OF

PLANNING Even fewer have a proper ST

cash forecast

WHY DO IT?

SHORT TERM Cash Forecast In Game Planning & Adjusting

SPOTTING

BAD TRENDS

13 Week Cash Flow Forecast Crucial Elements

10

A powerful management tool, the 13-Week Cash Flow projection, refreshed weekly, should be used by all companies, both

healthy and distressed to assist with managing and anticipating short-term liquidity needs.

13 Weeks Maintains accuracy, but long

enough to react

Weekly Avoids “intra-month” surprises

Beginning vs Ending Cash Reconciles weekly

To receive a 5 page whitepaper discussing the mechanics, send an email to info@advancedcfo.com with “13Week” in the subject line.

Liquidity tracks available liquidity

weekly

Major Categories naturally grouped, summarized

Specific Unusual items

Variance Analysis sufficient explanations

Weekly Accountability management tool

Graph Simple cash & liquidity trending

1 + Cash In - Cash Out = Operating Cash Flow

2 Beginning Cash +/- Operating Cash Flow +/- Loan Activity = Ending Cash

3 Ending Cash

+ Available Borrowings

= Total Liquidity

13 Week Cash Forecast Elements overview

11

13 Week Cash Forecast

12

OPERATINGCASHFLOW

+Inflows

-Outflows

OperatingCashFlow

NETCASHBALANCE+BeginningBANKCashBalance

+/-OperatingCashFlow

+/-LoanActivity

EndingBANKCashBalance

-OutstandingChecks

EndingBOOKCashBalance

LIQUIDITY

EndingCashBalance

Less:OutstandingChecks

NetCash

TotalRevolverAvailability

Less:RevolverUsage

AvailableRevolver

NetLiquidity

13ColumnForecast-1perWeek TOTAL

Forecasted Liquidity

13

Bootcamp,Inc.

13WeekCashFlowForecast-LiquidityChart

Week 1 2 3 4 5 6 7 8 9 10 11 12 13

Cash 202 141 184 174 177 66 163 113 88 (145) (170) (89) 1

Available 125 125 125 125 125 125 125 125 125 125 125 125 125

Total 327 266 309 299 302 191 288 238 213 (20) (45) 36 126

1 2 3 4 5 6 7 8 9 10 11 12 13

Available 125 125 125 125 125 125 125 125 125 125 125 125 125

Cash 202 141 184 174 177 66 163 113 88 (145) (170) (89) 1

$(200)

$(100)

$-

$100

$200

$300

$400

CompanyLiquidity

Weekly Variance Analysis

14

Bootcamp,Inc.

13WeekCashFlowForecast-PriorWeekVarianceAnalysis

OPERATINGCASHFLOW Forecast Actual VarianceExplanations

Better/(Worse)

CASHINFLOWS

ARcollections 50,000 55,000 5,000 XYZconeglectedtoapply$5Kcredit

CreditCardCollections 25,000 25,000 -

TotalCashInflows 75,000 80,000 5,000

CASHOUTFLOWSMarketing (8,000) (20,000) (12,000) MissinginvoiceforABCpartshowedup…neededtobepaidimmediatelyPayrollExpenses - (5,000) (5,000) Erroneousbankcharge,willbecorrectednextweek

ProfessionalFees (4,500) (4,500) -

Rent (11,000) (10,500) 500 Weoverestimatedthisbill

Taxes&Licenses - -

Other-CapitalExpenditures - -Other-CreditCards - -

TotalCashOutflows (23,500) (40,000) (16,500)-

OperatingCashFlow 51,500 40,000 (11,500)-

NETCASHBALANCEBeginning

Bank

EndingBank

Balance

Weekly

Change Explanations

NETCASHBALANCE

BeginningBANKCashBalance 150,000 150,000 -

NetCashProvided(Used) 51,500 40,000 (11,500)

RevolverDraw/(Paydown) -

EndingBANKCashBalance 201,500 190,000 (11,500)

OutstandingChecks (25,000) (25,000) -

EndingBOOKCashBalance 176,500 165,000 (11,500)

LIQUIDITYBeginning

Bank

EndingBank

Balance

Weekly

Change Explanations

EndingCashBalance 201,500 190,000 (11,500)

Less:OutstandingChecks (25,000) (25,000) -

NetCash 176,500 165,000 (11,500)

TotalRevolverAvailability 100,000 100,000 -

LessRevolverUsage 25,000 25,000 -AvailableRevolver 75,000 75,000 -

TotalLiquidity 251,500 240,000 (11,500)

13 Week Cash Forecast - EXAMPLE

15

Bootcamp,Inc.

13WeekCashFlowForecast

OPERATINGCASHFLOW

CASHINFLOWS

ARcollections

CreditCardCollections

TotalCashInflows

CASHOUTFLOWS

Marketing

PayrollExpenses

ProfessionalFees

Rent

Taxes&Licenses

Other-CapitalExpenditures

Other-CreditCards

TotalCashOutflows

OperatingCashFlow

NETCASHBALANCEDebtPaymentsTotalOther

NetCashProvided(Used)

NETCASHBALANCE

BeginningBANKCashBalance

NetCashProvided(Used)

RevolverDraw/(Paydown)

EndingBANKCashBalance

OutstandingChecks

EndingBOOKCashBalance

LIQUIDITY

EndingCashBalance

Less:OutstandingChecks

NetCash

TotalRevolverAvailability

Less:RevolverUsage(Begof

Week)

AvailableRevolver

NetLiquidity

CurrentWeek Wk2 Wk3

03/30/15 04/06/15 04/13/15

50,000$ 50,000$ 50,000$

25,000$ 50,000$ 75,000$

75,000 100,000 125,000

(8,000) - (7,000)

- (160,250) -

(4,500) - (35,050)

(11,000) - -

- - -

- - -

- - (40,000)

(23,500) (160,250) (82,050)

51,500$ (60,250)$ 42,950$

100 - -100 - -

51,600$ (60,250)$ 42,950$

150,000$ 201,600$ 141,350$

51,600 (60,250) 42,950

201,600 141,350 184,300

(25,000) (25,000) (25,000)

176,600$ 116,350$ 159,300$

PriorWk Wk1 Wk2 Wk3

03/23/15 03/30/15 04/06/15 04/13/15

201,600$ 141,350$ 184,300$

(25,000) (25,000) (25,000)

-$ 176,600$ 116,350$ 159,300$

100,000$ 100,000$ 100,000$ 100,000$

25,000 25,000 25,000 25,000

125,000$ 125,000$ 125,000$ 125,000$

$125,000 $301,600 $241,350 $284,300

ProjectedWeekBeginningWk13

>>>>>>>>>>>>> 06/22/15

50,000$ $450,000

200,000$ $950,000

250,000 1,400,000

- (45,000)

>>>>>>>>>>>> (160,250) (961,500)

- (89,650)

- (33,000)

- -

- (100)

- (420,000)

(160,250) (1,549,250)

>>>>>>>>>>>> 89,750$ (149,250)$

- 400- 400

89,750$ (148,850)$

(88,600)$ 150,000$

89,750 (148,850)

-- --

1,150 1,150

(25,000) (25,000)

>>>>>>>>>>>> (23,850)$ (23,850)$

Wk13 13WeekTotal

06/22/15

1,150$ 1,150$

(25,000) (25,000)$

(23,850)$ (23,850)$

100,000$ 100,000$

25,000 25,000

125,000$ 125,000$

>>>>>>>>>>>> $101,150 $101,150

ProjectedWeekBeginning

13Week

Total

What is a KPI?

Key Performance Indicator

Different for each company

Some are the same

What is a KPI?

• Cash measured daily

• Accounts receivable (DSO)

• Accounts payable (DSO)

• Inventory (Turns)

What is a KPI?

• Sales

–By day

–By sales rep

–By geography

–By whatever you need

What is a KPI?

What measures are investors looking for?

Is there something that all

businesses should think about?

What measures are investors looking for?

Paying Bills with?

22

Gross Profit Sales less Costs of Sales

Net Income Gross Profit less Operating

Expenses

EBITDA Earnings Before Interest

Taxes, Depreciation &

Amortization

CASH IS KING

Where do I Start?

Revenue

Cost of Goods Sold or Cost of Sales

Gross Profit / Gross Margin

Operating Expenses

Operating Income or EBITDA

Net Income

Most Companies?

• Annual Sales Growth – ARR – MRR

• Gross Profit Margin

• EBITDA Margin

• Net Income Margin

• Burn Rate

• Sales per Headcount

Summary Slides Tell the Story

STATEMENT OF OPERATIONS ($000,s) 2015 2016 2017 2018 2019

Revenue 1,677.2$ 6,812.9$ 15,788.3$ 29,886.1$ 46,654.4$

Cost of Sales 362.8 1,393.3 3,378.9 6,527.8 10,213.6

Gross Profit 1,314.4 5,419.6 12,409.4 23,358.3 36,440.9

Gross Profit Margin 78.4% 79.5% 78.6% 78.2% 78.1%

Operating Expenses 1,349.2 2,459.6 5,219.9 7,382.2 10,328.5

EBITDA (34.8) 2,960.0 7,189.4 15,976.2 26,112.4

EBITDA Margin -2% 43% 46% 53% 56%

Net Income (Loss) 158.5 1,801.0 4,310.9 9,589.8 15,700.9

Net Margin 9% 26% 27% 32% 34%

Sample Company, Inc.Summary Financial Projections ($000's)

Graphs Tell the Story Better

The Devil is in the Details

28

Make sure you have a

believable map that shows how

you are going to accomplish

your financial goals and solid

KPI’s that demonstrate you

know how to run your business

If you want investors to put

money into your

company…they have to believe

you can do what you say you

can do

&

Conclusion Money & Maps

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23rd of March, 2016

Thank you for being here today

Presenter:

JB Henriksen

Partner, Advanced CFO Solutions

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