Companies can get by with sloppy execution if they have a killer strategy or highly dedicated people willing to work 18-hour days, eight days per week to cover up all the slop. Just recognize you’re wasting a lot of profitability and time (i.e., you’ll burn both cash and people in the process!)

We encourage management teams to set aside an hour or more each month to brainstorm ways to improve each of these cash cycle components. This is a powerful exercise to do with the broader middle-management team at a half- to full-day monthly management meeting. It will give everyone a better understanding of how cash flows through the business and how each function can contribute positively.

The point is to have someone pay attention to the accounts payable people!

Also specify a due date (May 31, for example) on the invoice rather than include the standard “due in 30 days.

To tackle the cash conversion cycle, start by reading “How Fast Can Your Company Afford to Grow?” a Harvard Business Review article by Neil C. Churchill and John W. Mullins.

A frenetic approach just makes the company even more unstable. One, you’re not likely to be right. Two, even if you are right, nobody knows what the heck you’re doing. Three, you haven’t bothered to listen to anybody, so you have strained relationships you want to cement. Now, if you’re going to run out of money in five or six days, you’ve got a bit of a different story than if you’re going to run out of money in ninety days. That’s what I call the ‘burning platform’ problem. If you’ve got a burning platform problem, you don’t have a lot of time, so you have to take things in two steps. You have to gather your team together and say, ‘Guys, before we do anything else, we had better put this fire out. Then we’ll take a deep breath.’” - Henry Schacht.