Managing A Positive Cash Flow with Peter Kingma

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Apr 10, 2024

Peter Kingma, practice manager for Ernst & Young and author of Cash Is King, sheds light on the balancing act between profitability and cash flow. He discusses how different accounting practices influence cash flow and emphasizes the need for essential KPIs to avoid information overload. Kingma advocates for cultivating a 'cash culture' in organizations, shares strategies for small operational tweaks to boost cash flow, and highlights the importance of storytelling in communicating financial insights.

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INSIGHT

Cash Flow's Importance

Cash flow is crucial for sound decision-making and overall business health.
Understanding cash drivers and timing is key, as many daily decisions impact cash flow.

ANECDOTE

Profit vs. Cash Flow

Bill Gallagher had a profitable year but needed more cash due to excess inventory.
This highlights the difference between profit and cash flow, especially in inventory-based businesses.

ANECDOTE

Denim Company's Inventory Woes

A denim company overstocked inventory by chasing trends and low-cost sourcing.
This tied up capital needed for expansion and highlighted the need for better forecasting and sourcing strategies.

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Why is it essential for management to strike a balance between profitability and cash flow for sustained business growth?

In this episode, dive into the world of managing a positive cash flow and scaling up businesses with our insightful guest, Peter Kingma. We also explore the impact of different accounting practices on profit and cash flow, the significance of meaningful KPIs, and the importance of understanding cash flow in decision-making.

Peter Kingma works with multinational clients and leads EY Working Capital services in the Americas. Corporate leaders entrust him to help liberate cash through operational improvements, which help in reducing costs and improving service quality. Peter is also the author of Cash Is King.

Key topics that Bill and Peter explore in this episode:

- Different accounting practices and their impact on profit and cash flow

- The significance of measuring the right KPIs and avoiding information overload

- The impact of disputes in billing and payment on cash flow and potential solutions

- Having a "cash culture" in your organization

- Balancing profitability and cash flow management

- Making small changes in processes and operations to improve cash flow and profitability

- Avoiding comparison to industry norms and seeking improvements outside the industry

- How Peter’s book, Cash Is King: Maintain Liquidity, Build Capital, and Prepare Your Business for Every Opportunity, engages with the concept of managing cash flow

- The value of storytelling in explaining technical subjects

- Making strategic decisions regarding inventory and customer credit

Thanks to Peter Kingma for being on the show!

Get Peter’s book, Cash Is King: Maintain Liquidity, Build Capital, and Prepare Your Business for Every Opportunity.

Amazon US: https://amzn.to/3TWYkts

Amazon UK: https://amzn.to/49ogJ6O

Peter on LinkedIn: https://www.linkedin.com/in/peter-kingma

Peter’s website: https://peterkingma.com/

Bill Gallagher, Scaling Coach and host of the Scaling Up Business podcast, is an international business coach who works with C-Suite leaders to achieve breakthrough growth.

Join Bill in the Growth Navigator Coaching Program: https://ScalingCoach.com/workshop

Bill on LinkedIn: https://www.LinkedIn.com/in/BillGall/

Bill on YouTube: https://www.YouTube.com/@BillGallagherScalingCoach

Visit https://ScalingUp.com/ to learn more about Verne Harnish, our team of Scaling Up Coaches, and the Scaling Up Performance Platform, which includes coaching, learning, software, and summit. We share how the fastest-growing companies succeed where so many others fail. We help leadership teams with the biggest decisions around people, strategy, execution, and cash so that they can scale up successfully and beat the odds of business growth.

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This episode was produced by Story On Media & Marketing: https://www.successwithstories.com