A "quick and dirty" health check

The other day I got asked about a "rule of thumb" check for organisational health.

When I’m called in to help a business assess where it is at and what it should be doing – a bit of a “medical” on the business – my first queries are simple:

· What is your bank balance right now – today?

· What are your receivables – the money owing to you?

· How much of that will you receive this week? This month?

· How much of it has been due for more than 30 days?

· How much money do you need to pay out this week? This month?

· How much of it has been due for more than 30 days?

· What is the value of your current “work in progress”?

· When will you be able to charge for this?

· When do you expect payment to be received?

· What extra payments will you be liable for before this work is completed?

The answers to these questions give me a “quick and dirty” indication of the health of the organisation because they give me an indication of current cash flow issues – and positive cash flow is the life blood of a healthy organisation. Based on these answers I can advise whether intensive care (talk to your Board and bankers/financial advisors “NOW” because your situation is seriously bad) is required or whether some other action is more appropriate.