Cash Is King with Peter W. Kingma

 

In this episode of The Profit Answer Man, we sit down with Peter W. Kingma, author of CASH IS KING and leader of Ernst & Young LLP’s working capital practice in the Americas. With over 30 years of experience advising global companies on all things cash management, Peter joins us to discuss why cash flow is the true backbone of business success and how business owners can shift their focus from profit-and-loss statements to developing a “cash culture.”

Peter provides actionable strategies for managing the five steps from order-to-cash, improving collections, and boosting cash flow through better customer management. We also dive into the importance of supply chain management and discuss how creating a “Cash Leadership Office” can transform the financial health of any organization.

In this episode, you will learn:

• Why Building a Cash Culture is Essential: Peter explains why focusing solely on profit-and-loss statements can lead businesses astray, and how a cash-centered approach ensures long-term financial stability.
• The Order-to-Cash Process: Learn the five key steps in the order-to-cash process that businesses must optimize to maintain healthy cash flow and avoid liquidity crunches.
• Strategies for Effective Collections: Peter shares five tips for managing customer relationships and disputes to improve collections and cash conversion cycles.
• Supply Chain Management for Cash Flow: Discover how better supply chain management can keep your cash flowing smoothly, even during challenging economic times.
• Creating a Cash Leadership Office: How establishing a dedicated leadership team to focus on cash flow can enhance your bottom line and allow for sustainable business growth.

Key Takeaways:

1. Cash Over Profits: Even large companies struggle to manage cash effectively. Business owners must understand that cash flow is more critical than simply showing a profit.
2. Sales ≠ Profit, and Profit ≠ Cash: Peter emphasizes that even profitable sales can be harmful if cash isn't collected on time. Businesses must prioritize cash flow management alongside sales and profit.
3. Avoiding Cash Flow Pitfalls: Common mistakes, such as offering long payment terms or failing to consider the financial impact of customer service agreements, can cripple cash flow.
4. Aligning Teams with Cash Goals: Often, sales teams are incentivized based on revenue, not cash collection. Aligning incentives with cash goals can prevent cash shortfalls and improve business sustainability.

Bio:

Peter W. Kingma is the author of CASH IS KING and leads the working capital practice for Ernst & Young LLP in the Americas. With over 30 years of experience advising global companies, Peter specializes in cash management and working capital strategies across industries such as manufacturing, consumer products, aerospace, and defense. He has contributed to publications like CFO Magazine and CNBC, and is passionate about helping businesses build a cash-centric culture.

Conclusion:

Cash is the lifeblood of any business, and without careful management, even the most successful organizations can run into trouble. In this episode, Peter Kingma provides valuable insights into how business owners, large or small, can develop a cash-focused mindset and manage their operations for long-term financial health. By implementing the strategies Peter outlines, you can ensure your business not only survives but thrives, no matter what economic challenges you face.

 

Links:

https://peterkingma.com/

 

Hi, I'm the Profit Answer Man Rocky Lalvani! I help small business owners simplify their financial reports to make more informed business decisions with fewer hassles. We utilize the Profit First system created by Mike Michalowicz

Sign up to be notified when the next cohort of the Profit First Experience Course is available! Check out our website: http://profitcomesfirst.com/ Questions: [email protected] Email: [email protected] Relay Bank (affiliate link) - https://relayfi.com/?referralcode=profitcomesfirst  Profit Answer Man Facebook group: https://www.facebook.com/groups/profitanswerman/ My podcast about living a richer more meaningful life: http://richersoul.com/ Profit First Toolkit: click here to sign up Music provided by Junan from Junan Podcast Any financial advice is for educational purposes only and you should consult with an expert for your specific needs. #profitfirst