26Point Checklist

The framework · Business Operations

20 Cash Flow & Capital Management

13 sub-categories. The three numbers on each are the typical opportunity in that area across businesses — not your result.

Time7.0/10Financial9.6/10Automation8.0/10

These three numbers are researched cross-business benchmarks for the area — the typical opportunity available in it. They are not your score, not a forecast, and not a promise. What is actually critical depends on your business, which is what the audit is for.

20.1

Cash position

Time7/10Financial10/10Automation9/10
What this is
How much cash you have right now, across every account, net of what is already committed.
Why it matters
Profitable businesses fail on cash, not on profit. The position is the single number an owner should be able to state without looking.
You have a problem here if
You check the bank balance to decide whether you can afford something.
What to automate
Automate a daily consolidated cash position with committed outflows netted off. Bank feeds make this near-real-time and it removes a recurring source of low-grade anxiety.
20.2

Operating cash flow

Time7/10Financial10/10Automation9/10
What this is
Cash actually generated by trading, as distinct from accounting profit.
Why it matters
The gap between profit and cash is where most small-business crises live. Growth consumes cash even when it produces profit.
You have a problem here if
You are profitable on paper and short of cash in practice.
What to automate
Automate a monthly operating cash flow report alongside the profit and loss. Seeing the two together is what makes the gap explicable rather than alarming.
20.3

Cash forecasting

Time9/10Financial10/10Automation10/10
What this is
A forward view of cash in and out, far enough ahead to act.
Why it matters
Nine for time, ten for financial impact and ten for automation. A forecast converts a cash crisis into a scheduled decision, and it is the highest-value financial automation most businesses can make.
You have a problem here if
Cash problems are discovered in the week they arrive.
What to automate
Build a rolling 13-week forecast fed automatically from invoices, purchase orders, payroll and recurring commitments. Update it weekly without manual effort. Almost every element is already in systems you have.
20.4

Receivables/debtors

Time10/10Financial10/10Automation10/10
What this is
Money owed to you, how old it is, and how reliably it is collected.
Why it matters
Ten across all three channels — the highest-rated line in the framework. Debtor management is pure recovered cash, needs no new customers, and is almost entirely automatable.
You have a problem here if
You have invoices over sixty days old and no scheduled chasing process.
What to automate
Automate the whole cycle: invoice on completion, payment terms enforced, automated reminders before and after due date, escalation ladders, and an ageing report. Most small businesses are financing their customers for free without deciding to.
20.5

Payables/creditors

Time9/10Financial8/10Automation10/10
What this is
Money you owe, when it is due, and whether the timing is managed.
Why it matters
Payables are a cash lever you control directly. Paying early without reason gives away working capital; paying late without agreement costs relationships and sometimes supply.
You have a problem here if
Bills are paid whenever someone gets to them.
What to automate
Automate scheduling to terms, approval workflow, duplicate-payment detection and early-payment-discount evaluation. Nine for time and ten for automation — this is administrative work that should not consume a person.
20.6

Inventory investment where relevant

Time8/10Financial10/10Automation9/10
What this is
The cash tied up in stock, and whether that is the right amount.
Why it matters
Ten out of ten financially where it applies. Inventory is the largest reversible cash commitment most product businesses make, and it is usually sized by habit.
You have a problem here if
Stock levels are set by what feels safe.
What to automate
Automate demand-based reorder points, ageing analysis and dead-stock identification. Converting excess stock to cash is often the fastest liquidity improvement available.
20.7

Working capital

Time8/10Financial10/10Automation9/10
What this is
The cash cycle: how long money is tied up between paying for inputs and being paid by customers.
Why it matters
Ten out of ten financially. Shortening the cycle releases cash permanently, without borrowing and without additional sales.
You have a problem here if
You have never calculated how many days elapse between paying suppliers and being paid.
What to automate
Automate the calculation from your own data and track it monthly. Then attack each component — deposits, invoicing speed, terms, stock turns. It is a single number that focuses several improvements at once.
20.8

Debt

Time5/10Financial9/10Automation6/10
What this is
What you owe to lenders, on what terms, and whether it is serving the business.
Why it matters
Debt is a tool with a cost. The risk is rarely the borrowing itself but borrowing short-term money for long-term purposes, or losing track of covenants.
You have a problem here if
You could not list every facility, rate and covenant without checking.
What to automate
Maintain a facilities register with automated reminders on review dates and covenant tests. The financing structure decisions are advice-worthy and human.
20.9

Liquidity

Time6/10Financial10/10Automation8/10
What this is
The ability to meet obligations as they fall due, including under stress.
Why it matters
Liquidity is what buys time when something goes wrong. Businesses with adequate liquidity survive shocks that end equally profitable competitors.
You have a problem here if
You have no defined minimum cash buffer.
What to automate
Automate monitoring against a stated minimum with alerts, and rerun a simple downside scenario monthly. Setting the buffer level is a risk-appetite decision.
20.10

Capital expenditure

Time5/10Financial9/10Automation6/10
What this is
Spending on assets — equipment, vehicles, systems, premises.
Why it matters
Capital decisions are large, infrequent and hard to reverse, which is exactly why they are often made on gut feel and availability of finance.
You have a problem here if
Major purchases are justified by need rather than by return.
What to automate
Automate the register, depreciation, maintenance scheduling and post-purchase review against the expected return. Closing that loop is what improves the next decision.
20.11

Funding requirements

Time5/10Financial9/10Automation5/10
What this is
How much money the business will need, when, and for what.
Why it matters
Funding raised in a hurry costs more and concedes more. Anticipating the need is worth a substantial amount in terms alone.
You have a problem here if
Funding is considered when cash is already tight.
What to automate
Fall out of the rolling forecast automatically — the forecast should tell you the need before you feel it. The funding decision and negotiation are human.
20.12

Capital allocation

Time6/10Financial10/10Automation5/10
What this is
How available capital is deployed between competing uses.
Why it matters
Ten out of ten financially. Capital allocation is arguably the owner's highest-value activity, and the one most likely to be made by default rather than by choice.
You have a problem here if
Available cash goes to whatever came up most recently.
What to automate
Five out of ten and deliberately so. Automate the inputs — return data on past allocations, forecast availability — but resist frameworks that score decisions automatically. This is judgement about the future of the business.
20.13

Financial runway

Time6/10Financial10/10Automation8/10
What this is
How long the business can operate at current burn without new revenue.
Why it matters
Runway converts financial risk into a number of weeks, which is the only form in which most owners can act on it.
You have a problem here if
You cannot state how many weeks the business could survive a severe downturn.
What to automate
Compute automatically from the cash position and forecast, and display it prominently. Under stress it becomes the most important number in the business, so it should already exist when that happens.

Category totals

Time 91/130 · Financial 125/130 · Automation 104/130. The sum is the official roll-up; the averages above exist so categories of different sizes can be compared.