Presented by: Andy Fried, Business Coach
Small changes of just one percent in profit and loss statements can have a profound impact on cash flow. Andy Fried talks about the four levers on the profit and loss statement that can improve profits and cash flow.
The first lever is a simple price increase, this is by far the most powerful lever that a company has because it connects to the bottom line. The second lever is to sell more. It is certainly something that needs to be considered. The third one is better sourcing of the cost of goods sold. Negotiate better prices with suppliers. The fourth is reducing overhead by analyzing expenses monthly.
In terms of the balance sheet, we’re looking at improving the cash flow. The cash flow from operations should be equal to or higher than the net income. The three levers of the balance sheet are DSO Reduction days, DII Reduction days, and DPO Increase days.