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Cash Flow Planning is a Company’s Secret Weapon Against Disruptors

February 13, 2018
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The business world is no longer occupied with mere startups. Instead, we live in the age of disruptors – small, agile organizations with big ideas that are changing the world and the market that they are part of with new ideas and rapid adaptation to customer demand.Larger companies don’t always have the ability, or the foresight, to make the adjustments in time to address the threat of a disruptor. Recent years have provided cautionary tales, like behemoths such as Borders and Blockbuster falling to new ideas and innovations.But established organizations have a number of advantages over startups. They just need to take the time to recognize them, understand them, and leverage them. The Harvard Business Review lists 3 steps to ensure you can formulate a strategic response to market disruptors in your space, namely:

  • Understand the strengths of the disruptor organization
  • Identify your own advantages
  • Define how to keep the disruptor organization from eliminating your advantages

As you move through these steps, one advantage likely stands out, and that is your existing cash flow. Where a disruptor might need to seek out funding to make their product a reality, your established organization may already have a built-in means of funding your adaptation to changing market conditions.

Cash Flow Management is a Key Differentiator

Companies with existing cash flow have the advantage of knowing they have a base of funds from which to operate, making it easier to pivot to meet the challenge of a disruptive technology or product.Out of date financial information results in inaccurate cash flow planning, removing the advantage you have over startups. To leverage your cash flow as a tool to keep you ahead, make sure that your financials are up to date and accurate, better stabilizing your cash flow position.Predictable and consistent payment by your customers ensures that resources are available when you’re building your strategy to address new competitor challenges. Make sure your billing is timely and that your customers are reliable by performing credit checks as needed. Also, keep on top of invoices. Late payments can directly impact your cash position, giving you fewer options as you work to meet new market demands.Forecasting your future cash position can also put you in the driver’s seat as you rise to meet new customer expectations and weather the storm brought on by innovative new products from your competitors. The right software with proven cash forecasting models and what-if scenarios will inform your current situation, but also point to where you expect to be tomorrow to plan for innovation cycles and organizational fluidity.A startup’s strength is in its ability to change quickly, meeting the needs of customers quickly and transforming rapidly. But what startups lack is the historical data and established cash flow that makes tasks like innovation and R&D less risky. With solid cash flow management procedures in place, companies can meet disruptors head-on in the marketplace while having the stability they need to reinvent their products and services.

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