4 Innovative Ways to Cultivate Cash Flow Literacy in Your Organization

The beating heart of every company is cash.

Ready cash on hand and employees hard at work are two of the most important characteristics of a healthy operation. Although cash flow is a matter of finance and employee performance is a matter of human resources, they are undeniably interdependent. Simply put: You can’t pay your employees if you don’t have available cash, which you won’t have if your employees aren’t working and performing in the right ways.

Unfortunately, most employees outside of the finance department don’t make the cash connection. It’s up to you, the finance leader, to educate them about how company cash flow impacts them and vice versa. Here are four areas where you can promote cash flow literacy throughout your ranks.

1. Company Values

Every business focuses on increasing sales for revenue’s sake, but sales don’t equate to cash until the invoice is paid. Many factors outside of your finance department can affect how fast a customer pays you—from quick order processing to timely delivery, effective onboarding, and excellent customer service. These things also increase the likelihood of repeat sales, another cash flow driver. Start your cash flow literacy crusade by explicitly promoting such customer service and experience goals in your company core values to start creating an internal culture of cash flow performance.

2. Employee Onboarding

Next, begin explaining cash flow at the start of employment. Whether it’s a formal new-hire training program or an informal shadowing session, include these key concepts into your orientation:

• What is cash flow: Net cash in the business at any given time.
• Positive versus negative cash flow: More coming in than going out or vice versa.
• Why cash flow is critical: Covers today’s payroll and other expenses, pays off debt, allows for future business reinvestment, enables value creation for customers and provides a buffer for unexpected disruptions.
• The cash flow connection: Help employees understand how their role and performance link to cash flow.

In addition to onboarding, adding a quick lesson on cash flow to any routine annual training course can educate existing employees and act as a recurring reminder to all.

3. Routine Meetings

Reinforce your company core values and their connection to cash flow performance by openly talking about this at team and departmental meetings. Describe what the company is doing to boost cash flow, such as managing expenses and investing in automated accounts receivable and collections management. Then remind employees of ways they can ensure positive company cash flow:

• Keeping customers satisfied: It costs less to sell to existing customers than new ones.
• Operating within budget: Overspending negatively affects the cash flow equation.
• Looking for efficiencies: Finding ways to streamline individual work or whole processes can help increase cash flow.

To further motivate these behaviors, publicly recognize and reward those who consistently and materially exhibit them.

4. Individual Performance

When you write job descriptions, include specific parameters that correlate an employee’s duties and responsibilities to cash flow performance. Use those parameters to set employee key performance indicators so that you can compare actual-to-goal progress during performance reviews and to justify decisions about pay raises.

Back Up Cash Flow Literacy with Intelligent Automation

The financial health of any organization depends in part on employees understanding what cash flow is and how important it is to the company’s stability and their own job security. Today, the other key dependency is leveraging existing and emerging AI-based technology that can automatically streamline and improve cash flow performance.

Request your demo of Tesorio’s cash flow performance platform to learn more.