1107 Focus Spring 2020 Print - Page 13



CASH FLOW,
goals AND A
MAN WITH A
PLAN!
THE BLOG IN PRINT
by John Eeles
finance director at kmf
group and chairman of
leek town fc
For the last six years I have been the finance
director of KMF Group, a multi-national engineering
business based in Newcastle-under-Lyme delivering
sheet metal fabrication and precision engineering
to a blue-chip client base. We are also a Patron of
Staffordshire Chambers of Commerce.
I qualified as a chartered accountant in 1991 and
decided to work in industry rather than public
practice and started my journey as a young
accountant in the business world. I have been lucky
enough to work in many companies and several
different sectors – and all have had their own
distinctive challenges when it has come to cash
flow. I have a firm belief that the varied experience
I have gained has made me a much better finance
professional, and far better equipped to forecast,
plan and control the cash flow of a business.
Many profitable companies can still fail if cash flow
dries up, so getting organised and having a plan
is necessary. Even in a mature business cash flow
planning is essential and necessary to indicate
when cash reserves will need to be used or when
additional finance facilities will be required.
If you don’t plan your cash flow you can’t truly
understand the position of the business, and
without forecasting you can’t be sure of the
business's financial health and resilience to change.
The basic tools used for this are the short-term cash
forecast and the bigger annual integrated budget.
A rolling short-term cash forecast is the tried
and tested method for planning and predicting
cash at a granular level and can anticipate the
largest outgoings – wages, PAYE, rent, tax, direct
debits and supplier payments. It is also crucial to
understand when money is really going to come
in. The bigger annual integrated budget is a larger
piece of work but necessary to predict or highlight
the longer-term outlook for the business, and
often required when third party or bank funding is
needed to support working capital needs or growth
aspirations.
In both cases it is better to be prudent in terms
of money in and out – assume income is late and
payments are on time, and build in some head room
as something unexpected will always happen, even
with the best forecasts – unfortunately this is where
accountants and the accountancy profession get
accused of being negative or “glass half empty”. I
have reminded all my colleagues over the years that
there is a difference between being overly negative
and realistic.
Regardless of the size of enterprise you are
involved in, the principles and disciplines in this area
remain the same, and this brings me to the second
part of this article and a large part of my life outside
of work – Leek Town Football Club.
After many years of consultancy work in the finance
profession, and working all over the country, I
began to work locally again when I joined KMF.
This allowed me to become more involved in local
football and ultimately led to me taking the role of
Chairman of Leek Town F.C.
Running a football club is like no other business I
have been involved in – and although Leek Town
is small, the challenges faced make it feel a much
larger business. Cash flow and cash management
is a big issue in semi-professional sport. The
disciplines and experiences from my previous
roles have been a massive help to me. An annual
budget for the club is always prepared and set, and
prudence has prevailed - don’t budget for cup prize
money you haven’t won yet, don’t assume spectator
numbers will hold up if you are mid table, make sure
you have enough reserves when the weather means
you don’t play at home for a month, and don’t
assume your star player on contract is injury free for
the season. The list is endless.
As a businessperson reading this, I would urge any
of you to get involved in any local community group
as a volunteer, the skills and experience from your
business life are wholly transferable and could
make such a difference.
13.

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