Where the Money Is

Sound familiar?

• Profit on the report while the account stays empty, with no explanation.
• Can't separate fixed from variable costs, so doesn't know how far revenue can fall.
• Pays suppliers before customers pay, and that gap has never been counted in days.
• Prices at cost plus a familiar percentage rather than on the value delivered.

Each chapter answers one question

1. Chapter 1: How does a profitable business still run out of cash?

   How much profit did I make last month, and how much did the bank balance rise or fall?

   Profitable businesses still die from running out of cash, and it is the most common death of all.

2. Chapter 2: Why does selling more leave me shorter on cash?

   How many days before customers pay me do I have to pay out?

   The gap between paying suppliers and customers paying you is the capital you are forced to have.

3. Chapter 3: When sales fall, do my costs follow?

   If revenue halved, how much would my costs fall?

   If you cannot separate fixed and variable costs, you cannot set prices.

4. Chapter 4: Is cost-plus pricing safe, or just self-limiting?

   Do customers pay me because of my costs or because of the value they receive?

   Cost-plus pricing guarantees you do not lose money, and also guarantees you do not make much.

5. Chapter 5: Twenty numbers, or just the one that matters?

   If I could look at only one number every Monday, which would it be?

   One number checked every week is more useful than twenty numbers checked every quarter.