Connor Abene’s Post

How I helped a client go from “uncreditworthy” to getting a $2,000,000 loan: Last year my team and I worked with an 8-figure manufacturing client. They were doing cash-based accounting. So they would have months where they lost $500,000 and then the next month they would make $500,000. Their gross margin would be negative one month and the next month it would be 98%. Really inconsistent. This made their financial statements completely useless. With our help, they were able to get a $2 million loan with no personal guarantee attached to it. They would have never had that opportunity if we hadn't done all that work on his books. No one would lend you money if your books show that you may lose half a million dollars the next month. Now all their business looks consistent. These are 3 main changes we made: 1. 𝗧𝗿𝗮𝗻𝘀𝗶𝘁𝗶𝗼𝗻𝗲𝗱 𝗳𝗿𝗼𝗺 𝗰𝗮𝘀𝗵 𝗯𝗮𝘀𝗶𝘀 𝘁𝗼 𝗮𝗰𝗰𝗿𝘂𝗮𝗹 𝗯𝗮𝘀𝗶𝘀. The main change we made was switching from cash to accrual. This change provided a more accurate reflection of the company's financial health. Smoothing out the extreme fluctuations. It made everything more consistent. 2. 𝗜𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗲𝗱 𝗮𝗻 𝗶𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗽𝗿𝗼𝗰𝗲𝘀𝘀. Then we put in place a real process for inventory management. So that they know: • When to buy inventory • When NOT to buy inventory • When they had too much inventory No more guessing games, impulse buys, and unnecessary costs. 3. 𝗖𝗿𝗲𝗮𝘁𝗲𝗱 𝗺𝗼𝗿𝗲 𝘁𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝗰𝘆. Transparency is the cornerstone of trust. The people that don't want to show the books to their team are the ones that are underpaying them. We wanted to build more transparency for his leadership team. We opened the curtains wide: • Full P&L • Net Income • Credit cards • Cash accounts • Full balance sheet The whole shebang. This helped build trust with the team and enhance accountability. After working with 75+ clients, I've found that the companies that have had the most value from our CFO engagement have been manufacturing clients. And these 3 are the most impactful changes we've made in most cases. If you’d like me to take look at your business finances, DM me.

One key insight from your experience is the importance of accurate and consistent financial statements. By transitioning from cash-based accounting to accrual-based accounting, you were able to provide a more reliable reflection of the company's financial health. This change allowed lenders to see a more stable and predictable financial picture, increasing the client's chances of securing a significant loan. Another insight is the value of effective inventory management. By implementing a process for inventory management, the client gained clarity on when to purchase inventory, when to hold off, and when they had excess inventory. This eliminated guesswork, reduced unnecessary costs, and improved overall efficiency. Lastly, your emphasis on transparency and trust within the organization highlights the positive impact it can have. By sharing comprehensive financial information with the leadership team, you built trust and accountability. This level of transparency can foster better decision-making and alignment within the organization, ultimately driving growth and success. These insights demonstrate the power of strategic financial management and the impact it can have on a company's financial stability, growth potential, and ability to secure funding.

Free Cash Flow is THE most important financial metric for a business - Here's why: 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗙𝗿𝗲𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄? Free cash flow (FCF) is the money a company has left over after paying its operating expenses (OpEx) and capital expenditures (CapEx). In short, how much money it has left after paying the costs to run its business. 𝗪𝗵𝘆 𝗶𝘀 𝗶𝘁 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁? It's important because it shows you how efficient your company is at generating cash. The more FCF you have, the more you can allocate to: • Paying dividends to investors. • Buying back shares. • Paying down debt • Funding acquisitions, research and development, or other growth opportunities. 𝗛𝗼𝘄 𝘁𝗼 𝗰𝗮𝗹𝗰𝘂𝗹𝗮𝘁𝗲 𝗶𝘁? Formula: Free Cash Flow = Operating Cash Flow - Capital Expenditures Where: Operating cash flow: cash generated from your company's core business operations. Capital expenditures: cash spent on buying or maintaining fixed assets. 𝗪𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝗶𝘁 𝗺𝗲𝗮𝗻 𝘁𝗼 𝗵𝗮𝘃𝗲 𝗛𝗶𝗴𝗵 𝘃𝘀 𝗟𝗼𝘄 𝗙𝗖𝗙? High Free Cash Flow: • It's consistently positive • Exceeds industry average • The surplus is significant Low Free Cash Flow: • It's negative • Below industry average • It's not enough to cover obligations 𝗛𝗼𝘄 𝘁𝗼 𝗶𝗺𝗽𝗿𝗼𝘃𝗲 𝗳𝗿𝗲𝗲 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄? Here are 7 ways to improve your FCF: 1. Reduce costs 2. Increase profits 3. Optimize Capex 4. Increase revenue 5. Manage cash flow 6. Improve working capital 7. Reduce or refinance debt 𝗪𝗵𝗮𝘁’𝘀 𝘁𝗵𝗲 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝘄𝗶𝘁𝗵 𝗡𝗲𝘁 𝗜𝗻𝗰𝗼𝗺𝗲 (𝗡𝗜)? Some people confuse FCF with NI. But that's a mistake. The main difference is that net income is an accounting metric and FCF is a cash metric. Besides, free cash flow is a better metric than net income Why? Because free cash flow is more accurate and harder to manipulate. — Now you know :) I’ve worked with 75+ SMB owners to get their finances in order, feel free to DM me if you have any questions. And follow me for more content like this.

Three-Statement finance Model: A three-statement financial model is a comprehensive representation of a company's financial performance and position. It typically includes the following three key financial statements: the income statement, the balance sheet, and the cash flow statement. Each statement provides different insights into the company's financial health and operations. Here's a brief overview of each statement: Income Statement (Profit and Loss Statement): Purpose: The income statement provides a summary of a company's revenues, expenses, and profits over a specific period. Components: Revenue: Total sales or services provided. Expenses: Costs incurred to generate revenue, including operating expenses, interest, and taxes. Net Income (or Net Loss): Revenue minus expenses, representing the company's profit or loss. Formula: Net Income = Revenue - Expenses Balance Sheet: Purpose: The balance sheet provides a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity. Components: Assets: Economic resources owned or controlled by the company (e.g., cash, accounts receivable, property). Liabilities: Obligations or debts owed by the company (e.g., loans, accounts payable). Shareholders' Equity: The residual interest in the assets of the company after deducting liabilities. Formula: Assets = Liabilities + Shareholders' Equity Cash Flow Statement: Purpose: The cash flow statement tracks the inflows and outflows of cash over a specific period, providing insights into a company's liquidity and its ability to generate positive cash flow. Components: Operating Activities: Cash transactions related to core business operations. Investing Activities: Cash transactions for the acquisition or disposal of long-term assets. Financing Activities: Cash transactions with the company's owners and creditors. Formula: Net Cash Flow = Cash from Operating Activities + Cash from Investing Activities + Cash from Financing Activities These three statements are interconnected, and changes in one statement can affect the others. Analyzing them together provides a comprehensive view of a company's financial performance and helps stakeholders make informed decisions about its operations and investment potential.

SMB Finance 101: Net Income vs Free Cash Flow. Which should you FOCUS on to make more money: First, let’s go over what each metric means... 𝗡𝗲𝘁 𝗜𝗻𝗰𝗼𝗺𝗲 (𝗡𝗜): Net income is a measure of profitability. It helps you assess your company's ability to generate profits. You'll find it at the end of the income statement. 𝗙𝗼𝗿𝗺𝘂𝗹𝗮: Revenue (-) Expenses ━━━━━ Net Income 𝗙𝗿𝗲𝗲 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 (𝗙𝗖𝗙): Free cash flow is the money a company has left over after paying its operating expenses (OpEx) and capital expenditures (CapEx). FCF is good for measuring how well a company handles its cash position. The more FCF a company has, the more it can allocate to dividends, paying down debt, and growth opportunities. 𝗙𝗼𝗿𝗺𝘂𝗹𝗮: Net Income (+) Interest Expense (+) Non-Cash Items (-) Changes in Working Capital (-) Capital Expenditures (Capex) ━━━━━━━ Free Cash Flow It may seem that both NI and FCF would “trend” together… But that’s not true at all. It’s possible to have High NI and Low FCF. And it's also possible to have High FCF and Low NI. Here are a few quick examples of when this can happen: High NI, Low FCF: • High margins, poor collections • High margins, high debt levels • One-off events such as asset purchases, legal losses, etc. Low NI, High FCF: • High R&D investment (expensed on the income statement but not in cash) • Depreciation accounting that affects your NI but not your cash flow • An asset-heavy business with high D&A that generates a ton of cash 𝗪𝗵𝗶𝗰𝗵 𝗼𝗻𝗲 𝗶𝘀 𝗠𝗢𝗥𝗘 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁? Most people may say “Cash flow is king!” so you should ONLY look at FCF. Cash flow IS king, but the interplay between NI and FCF will give you a more complete picture of your business. Look at BOTH if you want to scale your business profitably. — I’ve helped 75+ clients manage their finances. If you need any help or want to ask some questions, DM me.

Certainly! Managing your business finances effectively is crucial for long-term success. Here are some tailored recommendations from ADMEL Business Consultants, with a focus on the manufacturing industry: 1. Budgeting and Financial Planning: o Set Clear Budgets: Identify your expenses, revenue streams, and financial goals. Develop a budget that aligns with your business objectives. o Track Cash Flow: Regularly monitor your cash flow to ensure you have sufficient liquidity for day-to-day operations and growth initiatives. 2. Emergency Fund: o Create a Financial Cushion: Set aside a portion of your revenue as an emergency fund. This safety net can help you to weather unexpected challenges or downturns. 3. Debt Management: o Be Strategic with Debt: Avoid excessive debt. Develop a plan to pay off any outstanding loans systematically. 4. Manufacturing Focus: o Shift from Finance to Manufacturing: As a manufacturing consultant, we emphasize on production planning, stock inventory management, production efficiency, quality control, and timely dispatch. o Customer Satisfaction: Ensure that your manufacturing processes align with customer expectations and deliver high-quality products. 5. Professional Guidance: o Consult with Admel Business Consultants: Consider working with our professional team we specialize in manufacturing. We are production experts, supply chain, and quality assurance professionals. o Tax Planning: We advise you on tax planning specific to the manufacturing sector. Remember, at ADMEL Business Consultants we tailor our services to meet your unique needs of manufacturing businesses.  Connect with Us: Ready to elevate your business? Let’s chat! Reach out via WhatsApp: • +27679841841 • +263772318355 Admel Business Consultants: Adding value, empowering leaders! 

PROFIT, MARGIN, MARKUP are all important, but CASH FLOW rules EVERYTHING Let’s talk Cash Flow game. Cash Flow game is intimidating if you don’t understand the rules of the game or worse outright ignore them. Cash flow is often overlooked by industry standards like a 10% markup for profit and another 10% for overhead. It’s EASIER to go with the industry standard, instead of going for what you actually need, but BIG problems occur when that industry standard does not even come close to being right for your business. The business’ ability to execute work, purchasing of materials, labor cost, workflow, vendor terms, customer payment terms, and the list can go on. What I mean is, it’s HARDER to keep up with the ‘standard’ and BETTER to manage to what you actually need for your business and to benefit what fits you. Every business is at a different stage in its capabilities.  Your business is no different and you must know what your business needs to do in order to produce the result you are expecting – that goes for the financial result of the project as well as the execution of the work itself. Here is WHY this is so critical to understand: When bidding on a project, every company can have a slightly different number to get the job done. Let's assume 4 companies each bid the same amount on the same project. Their bid amounts are the only same factor. Each likely has different cost structures for labor, subcontractors, and materials, and all have a different amount of cash on hand, ability to borrow, or even payment terms with their customers and vendors. Therefore, if you're trying to match the prices companies win projects at without considering other factors, you could be hurting your company, or worse, outright losing money. It IS these very items that determine your ability to cash flow a project or not. And, if cash flow is the most critical item for business success then you MUST be considering other factors outside of the price as the MOST important things to consider or at least consider them the same as price! How do you prevent a negative situation? Get AHEAD of your cash flow on the project. Before bidding, know what goes into the project, what resources you will need, and what it looks like when things go haywire. I’ve seen the horror stories that I’ve personally helped dig people out. It all starts with you. The right scope of work and project leads to the right opportunity, which leads to the right margin and terms. The margin and terms lead to the right cash flow, and a good cash flow leads to a successful bid and project. Cash flow confidence comes from: 🔹 Understanding the scope of work 🔹 Assessing the resources available to you 🔹 Allocating cost properly 🔹 Knowing your schedule 🔹 Find the realistic margin your business needs to succeed 🔹 Submit an accurate bid you know you can execute at Please share your thoughts, or add more relevant stories and insights! #cashflow #businessgrowth #construction

Learn your Cash Flows. Because cash flow is the lifeblood of a business. And failing this drives companies into bankruptcy. There are the 3 types of business activities to know. Each activity can absorb or release cash into a business. Here's what you should know and how to master each cash flow. 1️⃣ Operating Activities 🎯 the primary sources and uses of cash in a company's day-to-day business operations 🎯 include cash generated from sales, cash paid for purchases and cash paid for operating expenses Key sources of cash in this section include: ♦️ Cash received from new sales in the period ♦️ Cash collected from accounts receivable ♦️ Cash received as interest and dividends Key uses of cash in this section include: ♦️ Cash payments to suppliers and employees ♦️ Cash interest payments made on debt ♦️ Cash payments made for income taxes ***Depending on the accounting framework followed, dividends and interest paid/received may be classified into financing cash flows How to Master your Operating Cash Flow: ☑️ Monitor and analyze your cash conversion cycles ☑️ Perform sensitivity analyses 2️⃣ Investing Activities 🎯 involve the acquisition and disposal of long-lived assets 🎯 represent your investment in the future growth of your business Key sources of cash in this section include: ♦️ Cash received from the sale of property, plant, and equipment ♦️ Cash received from the sale of investments ♦️ Cash received from repayments of loans made to others Key uses of cash in this section include: ♦️ Cash paid for the purchase of property, plant, and equipment ♦️ Cash paid for the purchase of investments ♦️ Cash paid out to others as loans How to Master your Investing Cash Flow: ☑️ Use capital budgeting techniques ☑️ Analyze the correlation between Investing and Operating Cash Flows 3️⃣ Financing Activities 🎯 include transactions with the company's owners and creditors Key sources of cash in this section include: ♦️ Cash received from the issuance of common or preferred stock ♦️ Cash received from the issuance of debt Key uses of cash in this section include: ♦️ Cash paid to repurchase common stock or preferred stock ♦️ Cash paid for the repayment of debt ♦️ Cash paid out to shareholders as dividends How to Master your Financing Cash Flow: ☑️ Determine your optimal capital structure ☑️ Evaluate the impact of your dividend payment policy What do you think? ----------------------  ❌ Frustrated by Short-Sighted Financial Plans? Financiario can help.   ➡️➡️➡️➡️ Transform your strategic financial planning with long term forecasts ➡️➡️➡️ Anticipate the future with automated reports & dashboards. ➡️➡️ Align your operating plans with your financial strategy. ➡️ Solve your most critical strategic planning problems.

Learn your Cash Flows (by Oana Labes, MBA, CPA) Because cash flow is the lifeblood of a business. And failing this drives companies into bankruptcy. There are the 3 types of business activities to know. Each activity can absorb or release cash into a business. Here's what you should know and how to master each cash flow. 1️⃣ Operating Activities 🎯 the primary sources and uses of cash in a company's day-to-day business operations 🎯 include cash generated from sales, cash paid for purchases and cash paid for operating expenses Key sources of cash in this section include: ♦️ Cash received from new sales in the period ♦️ Cash collected from accounts receivable ♦️ Cash received as interest and dividends Key uses of cash in this section include: ♦️ Cash payments to suppliers and employees ♦️ Cash interest payments made on debt ♦️ Cash payments made for income taxes ***Depending on the accounting framework followed, dividends and interest paid/received may be classified into financing cash flows How to Master your Operating Cash Flow: ☑️ Monitor and analyze your cash conversion cycles ☑️ Perform sensitivity analyses 2️⃣ Investing Activities 🎯 involve the acquisition and disposal of long-lived assets 🎯 represent your investment in the future growth of your business Key sources of cash in this section include: ♦️ Cash received from the sale of property, plant, and equipment ♦️ Cash received from the sale of investments ♦️ Cash received from repayments of loans made to others Key uses of cash in this section include: ♦️ Cash paid for the purchase of property, plant, and equipment ♦️ Cash paid for the purchase of investments ♦️ Cash paid out to others as loans How to Master your Investing Cash Flow: ☑️ Use capital budgeting techniques ☑️ Analyze the correlation between Investing and Operating Cash Flows 3️⃣ Financing Activities 🎯 include transactions with the company's owners and creditors Key sources of cash in this section include: ♦️ Cash received from the issuance of common or preferred stock ♦️ Cash received from the issuance of debt Key uses of cash in this section include: ♦️ Cash paid to repurchase common stock or preferred stock ♦️ Cash paid for the repayment of debt ♦️ Cash paid out to shareholders as dividends How to Master your Financing Cash Flow: ☑️ Determine your optimal capital structure ☑️ Evaluate the impact of your dividend payment policy 🎯🎯🎯This is an excerpt from my 5* on-demand video course - The Cash Flow Masterclass. Start increasing your impact today. Executive Version also Available: https://bit.ly/cfmol What is your favorite tool? ---------- Join in our LinkedIn Learning course "Driving business impact for finance professionals" here: https://bit.ly/4a5fB9l Learn about trends in finance and accounting by listening to the FinanceMaster Podcast here: https://bit.ly/3NLSt73

What does it mean for your company to be liquid? Liquidity means you have sufficient cash and are able to meet short-term business debts when due. You need to be liquid to carry out normal daily business operations, especially when things are tough. Without liquidity, meeting expenses and paying creditors will be difficult. As previously mentioned, it is advisable to have a line of credit with the bank to obtain funds when needed. You may also obtain funds by selling some of your short-term investments. You may compute and analyze various financial ratios to determine if your business is liquid. Current ratio - The current ratio equals current assets divided by current liabilities. It reveals whether you can satisfy current liabilities with current assets. The current ratio typically should be at least two to one, meaning that you should have $2 in current assets for every $1 in current liabilities. If you are likely to have difficulty borrowing funds from the bank to meet unexpected needs, this ratio should be even higher. Quick ratio - The quick ratio equals cash plus marketable securities plus accounts receivable divided by current liabilities. These assets are the ones that are most “quickly” convertible into cash, so inventory and prepaid expenses are excluded. It should typically be at least one to one. Accounts receivable turnover - The accounts receivable turnover equals annual credit sales divided by average accounts receivable. Average accounts receivable equals beginning plus ending receivables divided by two. This “turnover” shows how fast you are collecting from customers. Inventory turnover - is the cost of goods sold divided by the average inventory and average age of inventory (365 days divided by the inventory turnover). You want to turn inventory over quickly so cash is received and inventory holding costs are kept to a minimum. The operating cycle is how long it takes to go from cash to cash. The operating cycle is the number of days from cash to inventory to accounts receivable to cash. It equals the collection period plus the age of inventory. A short operating cycle is best. Drop me a “let’s talk” in the comments if you would like to discuss your company’s financial situation, including your liquidity.