In this episode of "Ask a CFO," the host addresses the question of how to manage finances when expenses remain constant but sales are inconsistent. The focus is on understanding different scenarios, including the base case, best case, and worst case.
The base case involves analyzing the progression of the sales pipeline, considering stages of probability. The best case is often discarded when sales are unpredictable, as it doesn't provide a significant cash cushion. The worst case is the starting point, looking at contracted business with signed deals to determine the year-end cash balance. If it's insufficient, expense reduction strategies need to be implemented.
The episode also emphasizes the importance of gating items, such as large deals or donors, which can influence cash flow and expense management.
Key takeaways:
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In this episode of "Ask a CFO," the host addresses the question of how to manage finances when expenses remain constant but sales are inconsistent. The focus is on understanding different scenarios, including the base case, best case, and worst case.
The base case involves analyzing the progression of the sales pipeline, considering stages of probability. The best case is often discarded when sales are unpredictable, as it doesn't provide a significant cash cushion. The worst case is the starting point, looking at contracted business with signed deals to determine the year-end cash balance. If it's insufficient, expense reduction strategies need to be implemented.
The episode also emphasizes the importance of gating items, such as large deals or donors, which can influence cash flow and expense management.
Key takeaways:
Send your question to #AskaCFO
Sign up for the free starter membership below for access to free resources and financial tools which are created to support you at every step of your journey.
Click HERE
Connect with us: