Work Smarter

Good Bank Bad Bank

Posted by Dave on November 15, 2013  /   Posted in Work Smarter


Not sure if any bankers have heard themselves referred to like this but within business circles those terms are notorious indicators of the buoyancy of the business.

If the business is doing well then the account management from within the Bank is all peaches and cream. When you’re in this place you can do no wrong and the Bank’s (plural) are over you like a rash. The corporate seats to the Rugby or cricket, ballet or Opera will be pouring through the door from the bankers wooing them like the latest super-model. This is pretty much the space where those within Xero reside right now, I suspect. The banks will be busting down their doors to service them.

…. However, I suspect a dark day is looming and the company with the soaring share price but dismal financial performance is going to come crashing to the ground. A bit like a dot-com bubble burst I suspect. Only my opinion though.

What happens then? Well Bad Bank comes knocking. The Bank wheel in the heavy hitters from the Credit Management Team and they have authority to get your attention. A bit of a dramatic scenario but none the less it has happened to a lot of businesses, some who have recovered from a momentary blip and others who have spiralled so far down never to be seen or heard from again.


What are the metrics to watch – DAILY!!!

Working capital is a fun term but something a number of senior executives I have worked with have no idea of its meaning. And I suppose if you’ve grown up in Marketing or Engineering it’s not something that you had to pay much attention to. That’s the domain of the accountants – let them look after the numbers, that’s what floats their boats. But once you’ve aspired to a senior level you need to know about working capital. It’s a fundamental business driver.

I was in a meeting with Bad Bank and the Owner of a business a few years ago and the Bad Bank was laying down the future in no uncertain terms and told the Owner that the Bank could no longer support the business working capital requirements any further. After the Owner shook off his glazed-over expression he proceeded to advise the Bad Bank team about his expansion plans for breaking into a new export market. Wrought-iron hang-glider stuff. You see, he heard what the bank was saying but had nil comprehension.

Ok, what are the things you need to look for?

CASH – if you’ve heard it once you’ve heard it a million times CASH IS KING.

So how is your bank account looking? Do you have a cash-flow forecast? Is it annual, monthly, weekly or daily? In some businesses I have been in, the timing of cash-flows in and out was so critical to the short term survival that we had to know exactly what our cash-flow movements were going to be. Do you know? It’s not pleasant phoning the bank for approval to pay wages.

Debtor aging

What is the aging profile of the money your customers owe you? If the debt is skewed to more old-outstanding than current, then you have a problem. You need to focus on getting debt in. There comes a time when you have to make a hard call on a customer and become a bit hard-nosed about what they owe you. My perspective on this is a bit simple: if your customer cannot acknowledge your need to make a profit then they are disrespecting your business, therefore it might be time to terminate the relationship. Too often businesses spend energy and resource on customers who are not really worth the effort. Of course I understand the business requires customers to exist (unless it’s an SOE). It comes down to the Pareto 80/20 rule.  A simple metric I like to employ is this:

Current 30 days 60 days +90 days
Month 1





Month 2





Month 3





Track the effort over a time period and see how your efforts are being rewarded. If it’s taking too long then increase the effort.

As the old management idiom goes “you manage what you measure”.

Creditor aging

As with Debtor aging, you need to manage in the same but opposite way how you pay your suppliers. It’s very noble wanting to pay your suppliers by the 20th of the month but the reality is these days you’d possibly be the only one doing it. Terms of trade “20th of the month following” now has custom and practice to mean the end of the month. If you’re paying your suppliers before your customers pay you then you need to change tack very quickly. You’re in a cash-negative situation.

In one company a particularly large customer paid us on invoice 60 days following. We had to negotiate with our suppliers the same terms. Either they had to oblige or we had to find a new source of supply. It becomes a vicious circle but you have to focus on the survival of your business.


Oh yes, how much stuff do you have sitting on the shelf or uncompleted work-in-progress? This is closely linked to both Creditors and Debtors. Your debtors might be holding up paying you because they are waiting on something else to be supplied or completed. Likewise if you owe buckets to your suppliers, is it because you have too much on your shelves or because you are not churning the work fast enough?


Cash still is the metric

Cash is the lifeblood of any business and the laws of economics tell us the support you get will only be as good as the fundamentals of the business that the stakeholders see and believe.  The risk profile you hold will determine the extent of the investment you would make in any enterprise, and for me, the Xero business serves as a prime example of how risk adverse I see myself. I would need a fair amount of convincing that an investment at $41.00 per share is a wise investment for a business that is not managing to hold on to any of the cash they generate. The operating costs are a 1.32:1 against revenue. For every $1.00 of revenue they generated they spent $1.32 – how does that sit with Good Bank Bad Bank? Could your business function on that metric?

Taking control of time

Posted by Dave on September 26, 2013  /   Posted in Work Smarter


Time management experts have been saying for decades that we should be finding more ways of packing things into our days, but what do you discover….you’re spread too thinly and no-one or no-thing  gets the “best” of you. The full attention that the task or person requires is diluted down to a random portion of inappropriately planned or allocated time.

In his book “The Effective Executive” Peter Drucker notes “effective executives, in my observation, do not start with their tasks. They start with their time.”

So what are the biggest time wasters in your day? Can I suggest the following 5 items might be a good place to start and consider de-cluttering from?

After all, we are just trying to strike a balance here.

Time wasters:

1 technological novelties

My message here is not to be a Luddite and shun technology as the black art of the 21st century, however we should be controlling it rather than let it control us and our lives. Have you stopped to consider the amount of time we pour into emails, which, at the end of the day don’t provide us with any additional information to do our jobs more effectively or gain us more time. Computers and electronic devices serve a twofold purpose, instruments for work and for entertainment but we need to differentiate the time appropriateness of each purpose. Facebook, Twitter, Pinterest, Tumblr (I recently found a page that specified 335 social media sites) are all great tools and another platform for connecting to people but they can also be insidious for stealing our time and shifting the focus of our attention when really, the tasks at hand are being neglected or avoided. Don’t avoid technology, just use it wisely and make it work for you.

2 Lack of Personnel

I cringe when I hear someone talking about headcount as a metric in isolation to every other business metric. How many times have you heard about the business or organisation that lays-off employees only to re-employ the very same people, as consultants or subject matter experts, the very next day? The statistics move into acceptable parameters but the overheads sky-rocket, then the organisation shifts into panic mode trying to cut costs. Talk about tail chasing! To add insult to injury, the executives are faced with the inevitability of doing menial tasks themselves because they have no-one to delegate to.  This then takes them from the real job of working on the business, building the business and implementing the strategic plan, into working deep inside the business.

Have you ever heard of the Sales Spiral? When sales fall off, what do you do? Let a salesman go. Then sales fall further, so you let another one go. Sales dip further, so another one and so on. Can you see the flawed logic in those actions?

I recently observed a business leader chasing around deploying computers to staff while the business he was leading descended into chaos and faced the very real possibility of being shut-down. Core business had nothing to do with computers, the computers were merely a tool for people to do their jobs. The leader wasn’t a computer person.  Leaders have to learn to delegate tasks thus releasing them to do the job they were employed for. If you have a bent for tinkering, leave it at home and use it when you really have spare time. An effective leadership question: “is this something someone else could be doing” if the answer is yes, then delegate. If there is no-one to delegate to, then employ an assistant.

3 idle conversation

Seriously? Oh yes!! Those casual conversations that start in the hallway about the Sports team or what happened on the way to work can be the biggest time wasters in a person’s day. They can quickly erode 30 minutes at a blink of an eye. But it’s not only time wasted for you, it’s for everyone else participating in the conversation. And here we are caught in a dichotomy, do I not get to know my fellow employees and risk snubbing them and becoming a relationship failure or do I participate in idle chat and lose my way for the day? The answer is really quite simple. Is the conversation a matter of substance? Whether these conversations are about issues that involve the work or personal life of the co-worker. Sometimes these conversations lead into matters of substance and a leader must be perceptive in listening to detect an underlying issue.

You must find the balance between keeping up with people and having your time consumed in frivolous matters. Look for that appropriate moment to excuse yourself from the conversation to get back to the tasks at hand. Also be wary of the time wasters who chassé around the office being a nuisance and avoiding their own tasks. Maybe they don’t have enough to do and could be ideal targets for delegation!

4 Hobbies and Toys

Hobbies are a welcome and wholesome outlet to restore emotional health and relieve stress. However when a hobby consumes your time to the detriment of important activities or relationships then it has failed to serve its intended purpose.

Try to see if you can put your hobby to use and work for you by inviting a client along for the game of golf or taking a colleague out for a run with you or taking them fishing. Get the balance right, go for a run at lunchtime so you can then spend more time at home with family or friends after work.

Or maybe you need to re-evaluate the amount of time and money you have invested into these hobbies at the detriment of family, work or other priorities. Like technology and conversations, hobbies have their advantages and disadvantages. It all comes down to good choices.

5 Disorganisation

You cannot afford to be disorganised because you not only waste your time but also possibly the time of your staff and clients. Don’t overbook yourself, keep your calendar up-to-date. Look ahead to see what tasks can be delegated now to avoid the mad panic at the end. Remember the idiom “why has your problem suddenly become my problem?” Maybe your disorganisation is further confirmation that you need administrative assistance.

Be religiously punctual to appointments and begin meetings on time. Arrive at a meeting with an agenda of what you want to accomplish, not to manipulate but to organise. Make your agenda available to others in advance so they too can be prepared. Don’t call people to meetings as observers, they have better things to do with their time. The meeting should result in an action plan and if you frequently come away from a meeting tasked with nothing, you should be assessing your need to attend.

Surplus time

When you have your time back in order and under your control don’t waste it, use it to your advantage. Catch up on all the reading you have been missing out on such as all the emails you have been cc’d in on, or the ones that are FYI. Don’t delve into those until your patch is clear.

Also use your time at airports or in traffic or before meetings to help you catch up on your reading. Rather than watch an inane movie on the aeroplane why not catch up on all your reading first and then use any other time to help you toward your planning. This is all about turning inefficiency into effectiveness. Staying organised is a deliberate stance. Learn to delegate and learn how to say no to time wasters.

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