Episode 48: The Four Types of Cash Flow and Why It Matters

In Episode 48, Sam explores the four types of cash flow work we can do as accountants, and why it’s important to get clear on that for both us and for our clients.

This is the next stage after the series of Episode 41-46, which was about putting some habits in around your efficiencies particularly around end of year work, so listen to that if you haven’t yet. 

Sam covers the mindset shifts accountant need to make to take the next steps with cashflow advisory work with clients, what 2020 has taught us all about the need for cash flow and what hasn’t changed in our changing world.

Sam then outlines the four different types of cash flow work and why the ‘outflow’ work is so powerful for you and your clients, plus the difference between ‘doing for’ and ‘doing with’ and how it will give you better, stronger clients.

Sam shares a practical exercise you can do to understand this in your firm and with your networks, as well as the way our training as accountants has created a disconnect with clients around cashflow (plus how to reconnect!).

Finally, Sam touches on the golden opportunity JobKeeper has created and why we must encourage clients to take action on it sooner rather than later.

This episode is part of a series on how you can get more proactive about how you spend your time, feel more in control of your time and ultimately your career or business.

Listen to an excerpt:

What we cover in this episode:

• The mindset shifts accountants need to make to take the next steps with cash flow advisory work for clients

• What 2020 has taught us about the need for cash flow and what hasn’t changed in our changing world

• Why cash flow work is the fuel for businesses and the block many accountants have about it

• The four different types of cash flow work and the reason you must be clear on each of them

• Why the outflow cash flow work is so important for you and your clients

• How ‘doing with’ versus ‘doing for’ makes your work easier and gives you better, stronger clients

• The empowerment of financial literacy education for your clients

• A practical exercise you can do to understand this in your firm and with your networks

• The way our training as accountants has created a disconnect with clients around cash flow

• The power of connecting to where clients are at the problem they have that we’re solving

• Why JobKeeper has created a golden opportunity for us and for clients around cash flow

Quotes:

“What can we add on to our services with clients quite easily, that we already may have the technical skills for, and continue the journey after the end of year?

What [I’ve shared] over the last six or seven weeks becomes the framework for everything that we continue to add on as we get closer and closer to our magic.”

“The first type of cash flow for work is what I call outflow focused, understanding the fuel requirements [of the business]…the importance of this work is also of course that outflow sometimes is the only thing we can predict. A lot of forecasting work is done around revenue, and while we have some facts and figures on that…we kind of can’t predict it. So knowing your outflow and understanding it is super important.”

“There's a lot of cash flow work, so when you put up a shingle to say ‘we do cash flow,’ you've got to be very clear on what that actually is!”

“Why is cash flow work, particularly the outflow work, really important? I find that if you can really get people clear around planning and the more they plan and the more they can see and understand what the requirements are, the more safe people feel. Even if the work comes in and the fuel requirements are too big to maintain, they can actually make decisions to leave. People do feel safer if they have that. So many people stay up at night [worrying] because they don't understand the fuel of their businesses…it's probably the number one thing that we hear.”

“If we do it for them, they don't learn anything…[when we do it with them] they'll get to know their own business and it's so valuable. Then you can keep the price points down, because you're not crunching the data yourself, your client is.”

“Don't think that we have to do everything, we don’t! The more we educate our clients, the stronger they will become. From there, we can then take them on more of a journey.”

“We really need to connect to where the clients are in this, not where we want them to be or where we want to do the work…We do need to undo our thinking on [cashflow] a bit and really go back as usual to what is the problem we're actually solving. You have to actually ask the people who have the problem, and that's the clients: What do they mean by cash flow? What's important to them?”

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