9
O P I N I O N
Retrievable receivables Install rigorous controls with your PMs when it comes to the average collection period, and watch the money flow back into your accounts.
A s 2016 fades into the past and we prepare the year-end analysis, one of the most important New Year’s resolutions that all CFO, controllers, and financial managers need to stress to senior leadership and the project management teams is cash flow optimization. An example of a firm that really took our suggestions to heart illustrates how important optimizing cash flow can be and how valuable it became.
were entered into the Deltek Vision accounts receivable system. We instituted weekly cash flow reviews projected out 26 weeks. By August, the controller was not embracing the program and a replacement was made with a See TED MAZIEJKA, page 10 “An example of a firm that really took our suggestions to heart illustrates how important optimizing cash flow can be and how valuable it became.”
We were engaged in early 2016 by the CEO and COO of a firm that’s doing $18 million gross revenue, but had serious cash flow issues. Their AR was $4 million, and the “over 61 days” was at $2.2 million. They had less than $400,000 in the bank. The firm’s average collection period was more than 110 days. They had 57 project managers who didn’t seem to understand that part of their job was to ensure adherence by clients to contract terms. We started by instituting weekly AR reviews on all 57 PMs, and insisted that comments on when they would see cash inflows and how much was coming
THE ZWEIG LETTER February 27, 2017, ISSUE 1189
Made with FlippingBook Annual report