If you have taken any basic finance course through your undergraduate or masters work, you have heard the phrase “cash is king.” The point behind that statement is that cash flow is the lifeblood flowing through a business. Without cash, businesses cannot function. However, cash is often harder to track and figure out that bottom line net income. As a result, too many businesses do not pay enough attention to cash.

My favorite metric for tracking cash (and an organization’s management of it) is the Cash Conversion Cycle (CCC). The CCC tracks the “cycle time” of cash from when a dollar is spent on inventory to when a dollar is received as a payable. Typically, the smaller this number the better, and it can even go negative (see Dell below). The CC tracks this by following the cash as it is first converted into inventory and accounts payable (AP), through sales and accounts receivable (AR), and then back into cash.

As you can see from the flow, once cash is used to purchase inventory, it is no longer available for any other investments or payables until it is received back in cash. Thus, you see why a lower number is typically better. Dell has made the CCC famous, and as of January 2011, they had a negative 28 days CCC, meaning they received cash 28 days prior to having to spend it on inventory (i.e. they “played” with others’ money).

How did Dell get a negative CCC? It is not complicated if you think about it:

1) Customer pre-pay for product. Dell is a build to order PC manufacturer (mostly), and customers pay for their PC prior to Dell pulling inventory and building the PC.

2) They hold inventory on consignment. Dell’s suppliers own the inventory of parts that is in Dell’s factories. Dell does not take ownership (or make payment) for the parts until they pull it from the bin to use it. Thus, they don’t buy inventory until after cash is received from the customer.

3) They have very short AR cycles (well under 30 days).

4) They pushed their payment terms (AP) out as far as they could. However, they are fair to their suppliers who have put inventory in on consignment, so they haven’t pushed out 60 days. They still stay around 30 days for payables.

That all adds up to a negative CCC, which means they can buy inventory with cash. That provides Dell a cheaper source of funds (versus a line of credit), and it keeps them from having to gamble on inventory buys.

What is your CCC? For 2012, I would encourage you to begin tracking your CCC, and working to lower it.

The Taylor University MBA Book Club

In August the Taylor University MBA introduced and launched the Taylor MBA book club. The TU MBA book club is open to alumni, current students, prospective students, faculty, and friends. Good books are a big part of the MBA, but they are also a big part of lifelong learning. This is an opportunity for us to jointly read, consider, and discuss a book and how it can help us better lead the organizations we serve.

The first book chosen for the August-November timeframe was The Oz Principle: Getting Results through Individual & Organizational Accountability by Roger Connors, Tom Smith, and Craig Hickman.

The second book that we will be using for the Taylor MBA Book Club is Influencer: The Power to Change Anything by Kerry Patterson, Joseph Grenny, David Maxfield, Ron McMillan, and Al Switzler.

Our second book discussion will begin in January 2012, with the first discussion topic to be posted the week of January 23, 2012.  New discussion topics will be posted approximately every other week.  Plan now to join in the discussion.

To purchase the book simply click on the picture of the book below.

Basic Schedule:
Read Week 1
Discuss in Blog Week 2 (Dr. Wood to post discussion topic prior to week 2)

Book Description:  An influencer motivates others to change. An influencer replaces bad behaviors with powerful new skills. An influencer makes things happen.

This is what it takes to be an influencer.

Whether you’re a CEO, a parent, or merely a person who wants to make a difference, you probably wish you had more influence with the people in your life. But most of us stop trying to make change happen because we believe it is too difficult, if not impossible. We develop complicated coping strategies when we should be learning the tools and techniques of the world’s most influential people.

But this is about to change. From the bestselling authors who taught the world how to have Crucial Conversations comes Influencer, a thought-provoking book that combines the remarkable insights of behavioral scientists and business leaders with the astonishing stories of high-powered influencers from all walks of life. You’ll be taught each and every step of the influence process-including robust strategies for making change inevitable in your personal life, your business, and your world. You’ll learn how to:

  • Identify a handful of high-leverage behaviors that lead to rapid and profound change.
  • Apply strategies for changing both thoughts and actions.
  • Marshall six sources of influence to make change inevitable.

Influencer takes you on a fascinating journey from San Francisco to Thailand where you’ll see how seemingly “insignificant” people are making incredibly significant improvements in solving problems others would think impossible. You’ll learn how savvy folks make change not only achievable and sustainable, but inevitable. You’ll discover why some managers have increased productivity repeatedly and significantly-while others have failed miserably.

No matter who you are, or what you do, you’ll never learn a more valuable or important set of principles and skills. Once you tap into the power of influence, you can reach out and help others work smarter, grow faster, live, look, and feel better, even save lives. The sky is the limit…for an Influencer.

Rhinoplasty Surgeons

This specific review comes from a close friend that just recently had a few work done on there nose area. They visited a rhinoplasty surgeon in Austin Texas and asked if many of us could put them on each of our page. They said the health practitioner was very professional and all of the staff were very pleasant, it made the drive by San Antonio not to bad. They set up a no cost appointment to go over all typically the costs of getting a nose area job and even the doctor was honest regarding everything. They even had in advance before and after pictures so that she can see how former patients got turned out. We give that local business a 5 superstar for professionalism and friendliness.