At our manufacturers only alliance meeting in May, the overwhelming consensus among members was that all of us have cash flow issues and most organizations lack 
an effective strategy to make it better. The meeting tone focused directly on how to build cash simply and effectively. It also stayed on that directive when it came time to build questions for the financial experts to address at a later meeting. We wanted a few focused questions that would allow selected service providers the opportunity to provide some helpful guidance. The manufacturers present expressed an interest in the following four issues:
- How do I know I’m about to have a cash flow problem before I actually have a problem?
- After I discover I have a problem, where and how do I get the money to fix it
- What are some “solution strategies” that I should consider?
- What should I be monitoring and measuring?
Most businesses don’t have sophisticated financial models and rely on visual monitoring of Accounts Payable reports to determine if they have a cash flow problem. Unfortunately, by the time this method makes the problem obvious to leadership, it may require a significant amount of time and energy to fix what should have been a simple remedy. So, a question the manufacturers wanted to raise for the experts to address is, what are a few of the early warning signs of future cash flow problems? One response would be, changes in the credit rating status among your existing customers.
D&B says incomplete reporting causes credit rating drops. One of the major reasons companies make incomplete reports is the reluctance to self-report earnings issues. It is generally not a desire to hide problems, it is often a desire to buy time for a proper fix. Just as sales growth usually covers over systemic issues in most organizations, negative cash flow is usually the first real indicator of future payment problems. Do you know the current credit status of your top five customers and how much has it changed in the past 6 months?
It was also a strong consensus that the members would like some suggestions on time tested cash flow solutions that don’t require investment money, just increased awareness. While the presentations at the July 19th meeting will provide a long list of nuggets, one outside the box suggestion would be to train employees the skill of 
“upselling” and “cross selling”. While fairly common in retail, manufacturing organizations are usually just focused on selling knowledge and taking an order. If the easiest customer to sell is the one you already have, wouldn’t it enhance the sale to provide something they didn’t know they needed or that they didn’t know you could provide for them? Example, is the quality of the workmanship implied or do you sell them a guarantee?
These and many other cash flow topics will be discussed by manufacturers and invited experts in the financial field on July 19th. A link to the event registration is included and we look forward to your attendance and participation.