Part 6 of 10, Fraud Inoculation
Cash Flow Forecast
Of course one large contributor to survival was reducing the workforce. From the date of the fraud discovery to three and ½ years later, sales have decreased by almost half, yet payroll expenses have been reduced by more than 50%.
With the small monthly repayment plans in place, the firm now operates slightly above break-even, eking out a small operating profit during the majority of the months.
One large reason for being able to operate profitably, most months, is that every week we revise and create the new Bible – in the form of a Daily Cash Flow Forecast six weeks into the future.
This cash flow forecast includes AR in, AP out, occupancy expense, sales tax expense, checking account balances, 1099 expense, cash in through the retail stores, cash out to fund 401k agreements, auto-pays in the checking account, vendor and creditor agreement payments, shipping expenses, etc., whatever is needed, all on a daily basis. And we fit all that information into a one-page report.
Then we balance the checking account, materially, every day. Both the accounting clerk and the owner know every day what the checking account cash balance is as well as the net balance, assuming all outstanding checks had cleared, including which checks are outstanding and likely how long before they clear.