Name: Common Cash Flow Pitfalls in Mid-Market Companies and Strategies to Avoid Them
Uploaded: 2025-09-25T16:18:02.914Z
Duration: 1 h 7 min 4 s
Description: Common Cash Flow Pitfalls in Mid-Market Companies and Strategies to Avoid Them

Transcript for "Common Cash Flow Pitfalls in Mid-Market Companies and Strategies to Avoid Them": Alright. Hi. Hi, everyone. Welcome to this Agicap webinar, with Oana Labs. So very glad to talk to you about cash flow management pitfalls in mid market companies today. So I'm Michael. I'm the chief revenue officer for North America of Agicap, and you'll learn more about us during this webinar. Agicap is a cash flow management software for SMBs and mid market companies. So I will do my best, to view through concrete examples how a tool like Agicap can help you, overtake, this cash flow management pitfalls. And, I am live from Austin, Texas. So glad to have you here, and I will pass the ball to, Oana. Hi, Oana. Hi, Michael. Great to be here. I am actually live from California this morning. Thank you so much, everyone for joining us today. And while we wait for everybody to, trickle in, can you please pop into the chat and let us know where you're joining from? Let us know your city. Let us know your country. It's always so amazing to see how global these sessions get. Right, Michael? Yeah. Awesome. Yeah. Definitely. We see, like, people from Rio De Janeiro, Stockholm, Chicago, London. So it's already very global. We've got Tanzania. We've got Texas. We've got UK. A lot of UK. Italy. We've got US, Indiana, Texas, Manchester. Toronto. Hello, Canada. Fantastic. Great. We're just gonna give it ten more seconds or so for everybody to trickle in, and we'll get started. I see Chicago. I see Austin. I see India. Hello, everybody. Hello. Hello. Welcome. Today is all about common cash flow pitfalls in mid market companies and how to fix them. So excited to have you with us for the next hour or so. And, I think with that, we can just kick it off, Mickaël. And we can really pose a new, question for everybody. Let us know what is your biggest cash flow challenge. Is it funding growth? Is it customers paying late? Is it inventory tying up cash? Seasonal cash flows financing? Let us know in the chat. What does your biggest cash flow challenge look like? Let's give it a few seconds. Seasonal fluctuations. Inventory seasonal fluctuations. Funding growth, working capital management, funding growth, working capital management, access to credit, forecasting, a lot of the same answers coming back. This is fantastic everybody because guess what? These are the kinds of situations that we're going to be tackling today. I see a lot of forecasting, a lot of late payments. So with that, for those of you that, haven't met me yet, I am Oana Labes. I'm a CPA. I'm an MBA. And for the past fifteen or so years, I've worked with hundreds of mid market companies and growth stage companies helping CEOs and CFOs scale by building stronger financial systems, by building better and more resilient capital strategies and smarter cash flow management. I also founded the CEO financial intelligence program where I train executive leaders to connect financial insights with strategy so they can protect and grow enterprise value. And I'm also the founder and CEO of Financiario where we enable mid market companies with real time automated CFO reporting, and strategic guidance whether or not they have a CFO. And over the past fifteen years, I've also trained thousands of professionals inside global corporations and through my daily teachings on LinkedIn for those of you that follow me. And it's crazy to think that these, posts have now reached more than a 150,000,000 people worldwide. And if there's one thing that I've learned across boardrooms and financing deals and turnaround situations that I've dealt, unfortunately, too much with is this. Most companies do not fail because of weak products, because of bad markets, because of poor sales execution even. They fail ultimately because of avoidable financial blind spots. And I've seen this pattern repeat hundreds of times. No strategic financial planning, no discipline around cash, and no foresight to fund growth as a consequence. And that combination unfortunately always produces the same outcomes. Profitability erosion, liquidity stress, mounting financial risk, and of course, lost enterprise value. So at the center of all of this, there's always one culprit. Would you like to take a guess in the chat and let us know what you think that is? What's the one culprit behind all of these stories of eroded profitability that ultimately leads to eroded enterprise value time and again in so many mid market companies? Let us know. I see cash. I see CEO. Very good, everybody. I see cash and cash both time and again. You're on the money. This is exactly what it is. Almost unequivocally, it always comes down to cash flow, everybody. Not just the movement of money in and out of your bank account, but the deeper reality. Leaders not understanding how cash actually flows through the business, not building the systems to control it, and not developing the foresight to engineer that cash flow in a way that is there to fund strategic growth opportunities and to protect against critical risks when those show up. I'll give you an example. Years ago, I was working with a 52,000,000 distributor, and they had grown very, very rapidly over the past few years despite the fact that they actually lacked formal cash flow planning. They didn't have integrated budgets or rolling forecast to link their strategy with their liquidity. They didn't have capital plans to show how expansions with their expansion year over year would actually translate into working capital financing requirements. And they did not, believe it or not, have a three statement model that connected their income statement with their balance sheet and those two with their cash flow statement, so they have both reporting and visibility. And for a number of reasons, funny enough, that worked for them because the growth absorbed any pressure until it stopped. They were profitable in a highly competitive space, and that's what they focused on. They ran solid gross margins for their space, and they sold to blue chip companies. So they weren't really worried initially about collections. But guess what? They were growing much too fast, much faster than their bottom line could keep up. And they couldn't fund working capital growth internally. So what did they need to do? They needed to add more and more debt in order to, fund that growth in working capital, and they weren't prepared to support those credit increase demands with reports, with projections, with visibility, if if not for themselves then for their lender. So, unfortunately, the bank looked at them as a massive risk as much as they were a growing profitable company. So by the end of the year, their revenues had plateaued. They had breached, bank's covenant. So let me tell you what happened. A single quarter turned them upside down. They had delayed receivables. They had rising supplier cost. Everything tipped them into crisis. They needed to borrow more to plug those cash flow deficit. The bank was hesitant, of course, because of their lack of formal financial planning. They were perceiving this to be a significant financial governance deficiency. Right? The fact that you can show up with reports and projections for the massive cash, cash flow that you are going to be running through that business to scale it. So by the end of that year, their revenues had plateaued. They had breached bank covenants, and, unfortunately, their bank refused to increase their 9,000,000, dollar line of credit at that time. So they became overstocked on inventory, further tying up cash while cash reserves evaporated. So they quickly became what is called a a special loans client, the bank code for financially troubled companies. And, unfortunately, management was forced into emergency measures and months of damage control, which ultimately put them in a position to have to step up their reporting, their forecasting, to show how they were going to manage operating cash flows to fund those debt repayments and to dig themselves out of the liquidity and solvency problem they had created for themselves. So the kicker is that they were profitable the whole time, everybody. That is the kicker. Revenue and margin were fine, but liquidity was not. That's what happens without a capital plan and they're rolling thirteen week cash flow. Timing risk overwhelms performance. And I'd like to tell you that this is a one off event, but sadly, it isn't. These scenarios happen all the time because the system that most companies rely on are built for compliance. They're not built for cash flow strategy. Their strategy lives in slide decks with their management team. Their budgets leave and live in spreadsheets with their finance team, and then their cash flow plans pretty much live in somebody's head, unfortunately. So what you end up with is, for the most part, entirely predictable outcomes. You miss growth targets. Your cat you you head towards cash flow prices and you your leadership decisions are mostly reactive trying to address all of that. So today's mission is to show you how to break this cycle And we're gonna start at the top with a long range capital planning that every growth strategy depends on, and then we're gonna drop down into the short term mechanisms of working capital when receivables, payables, and inventory can silently trap millions in cash. And in between, Mickaël will be covering off concrete strategies and tools to transform cash flow from an afterthought into the most strategic growth and value driver that you actually have for your business. So give me a yes in the chat if all of that sounds good, everybody. And with that, before we get into any of that, Mickaël, could you please give us a sense give everyone a sense of how AGICAP helps connect short term cash positioning with midterm thirteen week forecast and then long term capital, cash flow planning in sync with the accrual budget. Yeah. Definitely would be happy to. If you can stop sharing your screen, and I will share mine and show you concretely how it's done. Up. Go for it. There you go. You see my screen? Yep. You see it? Perfect. So maybe first, before I dig into the product, just to tell you a bit about Agicap. So Agicap is a leading cash flow management software for SMBs and mid market companies, in Europe and North America. So we've got over 8,000 customers, and our sweet spot is companies with an annual revenue range anywhere between 10,000,000 up to half a billion, so mostly mid market. And what we see that the status quo of our new clients is always the same as they manage their cash flow and their cash forecast on Excel. So they have, like, this process in place with the finance team where on a weekly basis, it will download the bank statements and manually categorize the transaction and download the payables and receivables from their accounting system and reconcile those and try to cook some formulas and, and advance rules in Excel to have some kind of visibility, but it's, like, super, time consuming. It's not reliable. It doesn't allow you to really work as a team. But this is the status quo, right, of the Excel based cash flow management. So our goal is to, of course, make this much more automated and reliable by, first of all, integrating, with your live data coming from three different sources, the banks. Suppose so we connect directly to your bank account using using different method and protocols, host to host connection, Ebix in Europe, so far so on. We connect to the accounting system. So whether you use, QuickBooks, NetSuite, whatever your account system is, we have a way to to connect and and, and import this, payables and receivable automatically in the system so they would populate for your forecast. And but we also integrate all the, accrual budget and p and l, all the expected transactions that are not in accounting, but that, of course, would be critical. And your debts as well, that would be critical to give you good visibility on on on your cash. And these are the ISSOs that you can see here in this interface. So here in in solid green and red, you can see the actual banking data that comes on a daily basis from all your bank accounts. Here in the, intermediary color, you can see all this expected transaction that I mentioned coming from your accounting system, or from your short term, p and l. And here, the, hashed area is for, the gap to budget. Right? So based on how much you actually predict longer term to cash in and cash out on a on a monthly basis. And then, of course, like you said, Oana, the point is to have good visibility over different horizons. Right? So here we have, like, some module that gives you visibility on short term, midterm, and long term. So here, this is a module for short term cash positioning. So really understand, where your cash is, across your different bank accounts. So you can see your total cash balance. But most interestingly, you can see the evolution of your cash balance over the coming days with a clear breakdown of your cash cash situation for each of your bank accounts. K. So here, I'm only showing US bank accounts, like Bank of America, Citibank, and the mix of checking account, investment account, so far so. But, of course, we are global payer. So regarding of where you are, you could integrate your, bank accounts here as well across different geographies. And so here you can see your cash balance at the beginning of the day, at the end of the day, and most importantly in the coming days. So you can anticipate any overdraft. Like, here, for example, I've got my Bank of America account that's gonna go into overdraft in a couple of days if I don't do anything. And I can see why because I always have this visibility on all the upcoming transaction that are going to cause this, cash shortage, on this particular account. And same thing, you can also identify where you have some excess cash flow, that might be better off on an investment account that you could transfer directly from the tool. So first, you've got this real time visibility on how much cash do you have at hand and how, is it spread across your bank account and how is it going to evolve over the over the coming days. So it's really short term. But then, like you mentioned, point is to, have also good visibility over the midterm. So here we also have a a module for, thirteen week forecast, which is, as you know, the, industry standard, for midterm cash reporting. So when it comes to reporting to your board or to your banker or investor, this is typically the horizons that they will request. And so here as well, give you the possibility to have a clear visibility on the inflows and outflows. But instead of seeing a breakdown per bank account, here you can see a clear breakdown per category of inflows and outflows. So out of the shell, out of the shell, yeah, it's a breakdown across your operating cash flows, investment cash flows, and financing cash flows. But these categories, as you would see later on in the demo, can be completely, customized and adapted to, your needs. And then longer term, back to the first view, you can see, like, end of year or then 2026, how your long term cash is going to evolve and, and your cash balance. Same thing here with, like, your visibility, per category. So short term, mid term, long term, these are really the three different horizons that you need, with good visibility on inflows, outflows, cash balance, bank accounts, and categories. These are the basics. Back to you. That's fantastic, Mickaël. Let me just take over and share my screen again. There we go. Let's come back to my slide here. So I hope everybody can see that this isn't just about making payroll next Friday. Right? It's not just about that. It's about having that visibility with your thirteen rolling thirteen week rolling cash flow, forecast so that you are you get out of reactive mode. Right? You can fund growth. You can you can, achieve your strategic objectives. You can integrate AR aging. You can integrate your AP schedules. You can have real time bank feed, and you're not managing cash flow with a rear view mirror anymore. You're no longer surviving it. Right? That's not strategy. And that's where cash control platforms like Agicap can add so much tremendous value because you automate all of this data ingestion and you refresh your forecast on a daily basis. You get variance, of visibility. You get scenario testing, and you get to really you're empowered to shorten that cash conversion cycle. You're empowered to free up liquidity for growth. You're empowered to really, drive your strategy forward with a short, medium, and long term view like, Mickaël was, talking about. So let's continue with the hard truth that I've seen time and again across hundreds of companies now. Most businesses believe that they have a financial plan. But in reality, what they actually have is a static twelve month budget. So there's a massive difference between having a real financial plan that shows how you're going to achieve your strategic objectives over a number of period, you know, years into the future and the spreadsheet that lives in the next twelve months that simply reflects where you've already, where where you've already been by the time you're looking at your budget. Right? So maybe take a minute everybody to think about how this work inside your own company. Maybe you have set a target to grow by 25% year over year, Or maybe you're planning to enter a new market or launch a new product or expand the team or scale production capacity if you're in manufacturing, or if you're in distribution or logistics. So you'll need to manage a lot of moving parts along with this plan. Right? You'll need to manage that financing in the context of these new financing requirements. You'll need to manage maybe some dividend distributions to make sure, leverage doesn't climb, to concerning levels, while you're loading up the balance sheet on the other side. All of that to say you're going to need to capital plan to achieve those strategic objectives. But open your budget. Tell me where that lives. Tell me where that shows up. Drop your thoughts in the chat. Where in your financials can you actually see your strategic objectives planned out? Those are multiyear targets. Those are multiyear objectives. What you see, you see a twelve month capital expenditure plan perhaps. You do not see a three to five year CapEx spend. You do not see two to three years of of on your hiring road map to scale your operation. Right? All you see is the next twelve months, head count, plan reflected in your payroll expense. You do not also see your financing strategy unfolding, how you're going to be, bringing in, cash flows from from, the various, agreements that you'll be, that will enable you to access capital, and then how you'll be repaying that. All you see is how that movement perhaps if you if you have a a short term cash flow forecast, maybe at best you see that for the next twelve months. Many companies don't even take their budget all the way to, a three statement, model and we'll see that. But if you do, all you see is twelve months. Right? So you do not see your full cash flow timeline to allowing your business and your business cash inflows and outflows with those long term strategic objectives. Right? You do not. And the reality is what that means is that you're going to be trying to run a multi year strategic plan on a twelve month timeline. And then it's going to fail when you least expect it and you'll wonder why. That plan does not reflect your long term capital needs. You will not be you will not be steering the business, unfortunately. You'll be reacting. By the time you put that plan in place, things will have already evolved. And that is how so many companies miss, gross windows, fall behind competitors, freeze gross because cash isn't there available when they need it. Because all they do is they look ahead at best twelve months. They do not have long term visibility on the impact of their short term decisions on, those, objectives that are moving far and far away into the future for them. So let's talk about the four critical capital failures that lead to most problems at the strategic level. Number one is no capital structure road map. Companies rarely maintain forward looking plans that may that that help them plan or sequence the the inflows and outflows of equity, long term debt, working capital financing facilities in line with the milestones, for the for the business strategic objective that they're trying to, accomplish. So what that really ends up, meaning is that you do not have a target debt to equity ratio. You do not have a covenant aware borrowing base. So growth relies on ad hoc financing. You do not have the visibility to build in the capacity to then engineer what your what will ultimately enable you to be successful, which is that movement of cash in and out of your business. So with ad hoc financing, you are an unprepared company with an unprepared capital structure making last minute decisions. And, unfortunately, you will end up like so many other companies in these industries that we cover so often, in the mid market for financing terms or no financing at all. So your hands trying to fund those long term growth plans will be very much tied. Number two, accrual illusions is what I like to call them. Because budgets are presented on an accrual basis. EBITDA, net income, all of that without reconciling to cash flow from operations. Right? So there's typically no dynamic real time schedule that bridges net income to cash flow. So leadership assumes profitability for the most part, and they assume that profitability equals, cash availability. So for the most part, they live in this cycle where they kind of cross their fingers and hope. And, unfortunately, non cash changes, you know, working capital movements, timing of inflows and outflows end up telling a different story. So what that means is that cash flow ends up being managed pretty myopically, pretty short term, with a short term view instead of being engineered, you know, from a from a cockpit, if you will, a pilot cockpit to ensure that it's able to support the company to achieve its strategic objectives and really navigate to the final destination. Number three, incomplete forecasting architecture. This is where forecast pretty much extrapolate prior year p and l trends and they mostly stop there. Meanwhile, the business needs a strategic financial plan that is fully integrated across the income statement, the balance sheet, and the cash flow statement with drivers to control the main, performance drivers. Right? Revenue growth, market, margin compression, capital expenditure flows, financing inflows and outflows. So without all of that, there is no visibility into how decisions that you make today will affect the company's capital structure, the mix of debt and equity that fund your assets, how that will impact your leverage capacity, your ability to attract and and, more debt and keep funding your growth. No visibility into how, all of your decisions fund your debt service capacity, which is your ability to, satisfy your principal and interest, repayment obligations in real time. And, no visibility into distribution of capacity. How much can you actually pay out to shareholders before you destabilize your balance sheet? So none of that is visible to you without, that integrated three statement forecast. So finally, the fourth, critical failure, error is is your base case thinking that dominates. Right? Very few companies include downside and upside scenarios and probability, weights, sensitivity tables, all of that to show you how, for example, a 200, basis point rate hike or a 30 extension for one of your clients, it can impact your your cash flow at the end of the day. How that impacts your cash flow coverage ratios? How that impacts your covenant headroom. Right? So the consequences that most companies end up with growth plans that look sound in a board deck. They look pretty pretty good at the presentation level, but they they lack the liquidity engineering to really be able to withstand, real, economic shocks. Right? So a couple of four quarters delayed receivables, tightening credit market, and you you find yourself facing liquidity issues, covenant breaches, last minute financing, or distressed financing, even worse. All of that despite the fact that income statements looked very profitable when you looked at them. Right? So keep this in mind everybody. The purpose of strategic financial planning isn't just projection. It's engineering that capital adequacy. It's planning the size, the cost, the timing of every dollar that you require or your local currency. Right? Every, unit of currency that you require so that the strategy can actually be executed. So until a company integrates these technical disciplines, capital structure planning, cash flow modeling, stress testing into its long, long short, medium, and long term cash flow visibility, its long term goals sadly and frequently remain aspirations more than, executive commitments. So from this perspective, I typically see three levels of maturity in mid market companies. And feel free to chime into the chat and let us know which one resonates with you the best. Level one is the one year p and l budget. This is where most companies stop. They've got revenue. They've got expenses forecasted for the year. Maybe they have a margin goal target. Right? But the reality is you only have a p and l. You do not have visibility into liquidity, into leverage, into funding capacity. You cannot see how gross will impact your working capital requirements. You cannot see if your capital expenditure plan is fundable over the long term. You cannot see, how your your, debt service runway looks like, how much you can repay, what is the the timeline for that. So the moment assumptions start to shift in your plan, pricing, hiring pace, customer timing, revenue growth, all of that, the p and l is blind. And on day one, your budget your p and l budget is already outdated. Alright. Level two, this is the the three statement budget level. So this is a step up, of course. You now have an income statement, you have a balance sheet, you have a cash flow forecast. It gives you a much fuller picture of your business health, of your capital requirements, but here's the gap. Most of those plans are still built once a year and left static. They're not all full forward monthly. They're not updated with actuals in real time. They're not reforecasted, very importantly, as conditions change. So while you did add more detail than in level one, you're still managing the business with outdated assumptions and with virtually no visibility into the future. Alright. Let's talk about level three. So level three is the is the strategic financial plan. This is where leadership starts to truly connect strategy to capital strategy and then all that to cash flow, short, medium, and long term. And at this level, you have a three to five year forward view. You have all three statements integrated. You have rolling forecast with automated reforecast. You have a true capital and cash flow plan. You understand when financing will be required, how much, on what terms, and how all of that will be flowing in and out of the business and how it links up with other capital sources, and uses. So you won't just be reporting performance at this level. You'll be engineering preparedness. Because as your plan evolves as as your reality rev evolves, your plan will also evolve with it. So you will know if your growth is actually fundable. You will know how much liquidity you need at every stage, and you will very importantly be able to adjust before you hit a wall. So let us know in the chat what level is your company at. Are you at level one with a one year p and l? Are you at level two with a three statement model, or are you at level three with a strategic plan? I'd love to see what everybody is at. I'm seeing some level threes. Congratulations, everybody. That is such that is such outstanding performance. But let's see about level one and level two. There's a lot of level one and level two in there, Mickaël. There's a lot of level one and level two. So here is the reality, everybody. Without a cash flow plan, there is no execution plan. And when we talk about cash flow planning, what we talk about are the three strategic types of cash flow from operating activities, from investing activities, and from financing activities. You have cash flow from operating activities which is, to say that is the cash generated from your core business operation. Right? Your sales, your expenses, your working capital management. Then you have your cash flows from investing activities. Effectively, the cash that is used or generated from investments in long term assets like property, equipment, acquisitions. And then finally, you have your cash flows from financing activities, which are the cash flows that are related to transactions involving debt and equity transactions. Right? Your your new debt, financing raises, your new equity raises, and of course, your dividend, payout reflecting how, you ultimately fund your operations and your assets and your growth. So understanding and managing all three cash flow pillars is crucial for maintaining a financial, your a healthy cash flow and your your financial health as a business and being able to support the overall strategy, and strategic objectives that you have set forward whether they're big or small, whether your company is big or small. So ideally, the rule here is that you want to generate sufficient operating cash flow to fund all of your debt outflows, from that you see in financing, cash flows, projected financing cash flows and to fund all of your projected investing investing, cash outflows. And at the end of the period, you want to have positive net cash flows because otherwise, you'll be stuck bridging a deficit, funding a deficit, and the only way to do that is using your existing cash reserves or plugging in the deficit with more capital, debt or equity. So why did I call these three strategic? Why did I call the three cash flow pillars strategic? It's because every one of them connect directly to your leadership decisions, not just your accounting entries. Your operating activities are not just about booking revenue. They're about strategic decisions on pricing, on production efficiency, on inventory management, on how you negotiate your payment terms with your customers. These choices directly impact your operating cash flow that you will be seeing reported historically, and you can engineer it into the future. Same with investing activities. Right? And and cash flows from investing activities. This is so much more than just CapEx. It's about where you strategically choose to allocate your capital for growth, be it in new product, in market expansions, in technology upgrades, in acquisitions. These are fundamental strategic investments that will position your company for long term revenue generation, for long term cost management and maybe savings for long term, profitable earnings and cash flows into the future. And the same with financing, activities and cash flows from financing activities. It goes so much beyond just taking on debt or equity. It's about how you strategically choose and manage to fund your company's growth and its assets, the balance between, debt and equity that ultimately funds your business and, your growth in the business and the assets in your business. Right? And all of this to say, you need to make critical decisions as part of your financing, cash inflows and outflows to understand how much you can you can, add on to the balance sheet in terms of debt and equity, how much you can, offload off the balance sheet especially in terms of, in terms of, equity, but also how much debt can can, leave the balance sheet, and can be satisfied with the amount of profitability that you bring in and then the cash flow that you bring in every period. And all of that speaks to your future flexibility as a business, your ability to take on and run with the next, fantastic opportunity that shows your way or, how you are able to successfully address and and withstand critical risks that threaten your viability as a business. These pillars show how your choices and your business decisions shape your results. They're not just reports for the past. They're levers for how you can engineer what happens next. This is what is so critical to remember. If you have the right system, then if you can see ahead enough, you can act in real time and you can engineer the future instead of being, a spectator to the show. So, Mickaël, how can someone get that level of visibility in Agicap to ensure this strategic alignment and be able to go from their p and l to their cash flow plan and understand what if scenarios and stress test across all of the three main type of business cap types of business cash flows. Yeah. They're great great questions. And I think we also had some question in in the chat, related to that issue. So let me show you how it's how it's done in Energy Gap because, up yeah. What what we hear a lot of times, like, and also especially here in The US, tends to be some confusion on cash flow versus, like, FP and A and accrual budget. How do they complement? What is where is the frontier between these two worlds? So what we'd like to do at Agicap is to show, like, the complementarity, between, like, the accrual budget and the, the cash flow budget. So here is, the methodology that we recommend to our customer when they implement, Agicap. Different situation. Scenario number one, of course, our clients will already have a long term cash flow budget. And this case, easy enough, they could directly, import it in the tool. But what we see, most of the times, what you described, they would not have a a long term cash flow budget, but they do have, like, a p and l for the current year or long term, strategic actual, budget that has been approved by the board and that they would like to convert into a cash flow, budget. And so for this, that's quite, unique. In the market, we have a module that allows you to convert your accrual budget into a cash budget. So you can import, your existing PNL in Agicap and in a few different steps, converted into a long term cash flow budget. Three simple steps. First, you need to match your p and l categories with your Agicap categories because as I showed you, in Agicap, you can recreate the in cash inflows and cash outflows categories that make sense for you. So you need to do this matching, between your, your p and l and and your Agicap categories. Then, you can add the payment terms for your suppliers and customers. It's gonna be either very general for each customer and each supplier or for category of supplier or customer if you prefer. And then, because you mentioned, like, equity, debt, and all all the fundings, so they're also very critical to have a three sixty view on your long term, cash flow forecast. You can you also, add all of these, investments and loans directly in here. And once these rules have been set up, you have a long term cash flow plan with this long term values here that are, 100% aligned with your p and l and longer term, accrual budget. Yeah. So that's step one, and this is what is called the indirect method. So going starting from your p and l to, to to define your long term cash flow plan. And we mix this with a direct approach. So the direct forecasting cash forecasting, meaning, you go from your actual, banking data and and accounting data. So more like short term and actual data to kind of stretch the trend, the historical trend, and see how it's gonna impact your your cash in the future. And I will show you how this, second step is done because we really cross this through approach, like indirect approach with a direct approach. And to do this, so you can here dig into the cash inflow and outflow category. So, again, based on what you said, the, the breakdown that we recommend here as as you suggested, operating cash flows, investment cash flows, and financing cash flows. So it's very, clear, how you perform, across these three categories. But, again, this is something that can be completely adjusted to your need if you if you prefer something either more granular or if you prefer to have, level one categories that are different from this, this can be completely, adapted to your needs. And then from here, you can, really adjust. Right? So for example, if you want to project, your revenue based on actual performance, so you can take the, cash inflows that are, for example, in your in a seasonal business, same as last year, same same month last year, but with a slight increase or decrease, you could do it here or you can also create, like, formulas here as you would do in Excel or you can plug to, your revenue, management system if you already have some advanced revenue forecasting in a third party tool. We give you a lot of flexibility, to refine your forecast for each, of those, categories. K. So here we combine, like, all your existing budgets with your actual performance to help you refine your forecast for short term, mid term, and, long term. You also mentioned the importance of, like, stress testing and making sure that when it's time to make important, for example, investment decision, to have, like, good visibility on the cash impact, of those decision across this different horizon. And, again, that's something that can be really complex to do in Excel. Right? Because it's already hard enough to maintain a base cash forecast in Excel. But now when you need to maintain or create multiple cash scenarios, it gets even more difficult and cumbersome. And for this, we have a dedicated feature that allows you to easily clone, your base scenario and then to make some adjustments, directly in Agicap. So for example, if you want to see what's gonna be the impact of a new, a new project, like either acquisition of a new company, investments in a new product line. You can clone your Agicap, main scenario and then make some adjustment to your formulas and your hypothesis on your inflows and outflows. So you can see in the blink of an eye what's gonna be the impact in short term and long term. Right here, you see definitely a tighter cash flow situation over the coming months. But then starting mid April twenty twenty six, the investment would stop paying off and and generating, additional cash flows that would be very beneficial to to the company. So this is, like, how you can easily create and maintain dynamically what if scenarios that also remain connected to your banking data and your accounting system. So these scenarios also evolve day after day, week after week, to stay in line with actual situation of the of the business. And last thing I wanted to add because, of course, this breakdown across operating cash flows, investment cash flows, and financing cash flows means nothing if you cannot automate, the categorization of your transaction. Right? Because you've got hundreds, thousands, tens of thousands, sometimes hundreds of thousands of banking transaction and expected transaction to categorize. So when it's done in Excel, usually it's done through manually or through very complex, rules. Here in AGCap, we use the power of artificial intelligence so that all of your transaction will be automatically categorized based on what makes sense for you. So for the first couple of weeks, you will need to train the algorithm and do this manually, and then the AI will take over and do it for you. So it's 95% covered by the AI. And if needed, you can also add some custom rules as well that can, override, what the AI does. So in a yeah. In a nutshell, this is our approach to combining, accrual budget, PNL with the direct forecasting method and give you the flexibility to test your, hypothesis, very easily in Agicap. That's great, Mickaël. Thank you so much for sharing all of that. And let me now go from high level strategic cash flow pitfalls to, really where everybody ends up stumbling even with the very best plans, which is short term operating side of the business. Right? And that's so cool how you can cover the gamut, in a between short term, medium, and long term. Because fundamentally, this is this is, you know, where if you are able to put together a long term strategic multi year plan to fund the the strategic objectives of the business, you then need to zoom into the current year and then into the next thirteen weeks for that, immediate cash flow picture and cash flow visibility, into your, you know, main gauges to control that, which is through the day sales outstanding, days inventory outstanding, and days payable outstanding, and the composite needle that is the cash conversion cycle. Because fundamentally, every operational choice that a company will make will end up impacting at the operating, side of the at the operating cash flow, one of these or multiple gauges. So, the goal here is to get everybody in a position to understand the impact of business decisions on these cash flow drivers in, the short term, and also be able to get that visibility that you, so eloquently articulated with your, tool, Mickaël, so that ultimately, everybody can, can tackle more than just strategy. They can take tackle execution risk as well. Right? Let's think about it as, the plumbing of cash. Right? What actually happens between your order, your invoice, and your shelf, shelving in your payments. Right? It's it's think about it this way. If strategy sets the destination, then the cash conversion cycle decides if you have enough fuel to actually get there without, stalling on the highway, to put it that way. Right? So the day to day trap that I see most often is working capital that isn't actively engineered. So what does that actually mean? It means clear owners for receivable collections, for inventory managed, for AP collect AP management with targets. It means trigger thresholds. Right? When a customer hits 15% over terms, when, an SKU, is cover you know, it exceeds a number of weeks, on your shelves, when AP aging crosses a certain threshold over threshold over a number of days. And also pre agreed playbooks. Right? What happens this week, not next month, depending on the movement that we see inside our cash conversion cycle. Right? So when we when we trip any of those triggers. So if you do not actively engineer your receivables, your payables, your inventory, they might look fine as you look at them in a in a historical report. But in practice, what you're gonna see is that you're going to face cash traps that you're going to stumble on and you won't really know where they came from. And the answer is they came out of the foresight, out of that forward looking visibility that you never, had and out of your, ability to engineer how, terms, how inventory turns and how payable, agree payout agreements all, really, happen in the business. So you can have sales growing, but you can have margins, and you can have margins looking healthy and you can have strong EBITDA and yet you could still have, tight liquidity. And why is that? Because millions quietly get locked inside uncollected receivables, piled onto shelves as excess inventory, or burned away by suboptimal payable practices. And for mid market companies, this is where tracks really start to show. The p and l looks solid, but the balance sheet tells a completely different story many times because all that cash that could be funding growth, that could be funding debt repayment, that could be funding dividend payout is frozen stuck inside your working capital cycle. And that's why I call these the technical fault lines of cash flow. So let's get into them. They are the accounts receivable and the day sales outstanding, which is to say the average days that it takes you to turn your invoices into cash. It's the, the second, fault line is inventory and the days inventory outstanding, which is the average, days that inventory sits on your shelves before sale, and the accounts payable and the days payable outstanding, which is the average day that it takes you to really pay suppliers. And together, you know, they make up the cash conversion cycle or the CCC, which is the sum of your days inventory, and days sales outstanding less the relief you get from your days payable outstanding. And of course, lower is better and negative actually means customers and suppliers help finance your growth, which typically happens if you're a very large and powerful company potentially like Dell or Apple. But it also happens if you're a smaller company struggling to extend meaningful terms to your customers because you cannot afford to fund or to finance your cash conversion cycle. So let's start with receivables. When credit terms drift longer than intended, your collections will lag and your customer concentration will build and you will end up with multimillion dollar cash traps. And the three levers that would move would help you move fast this year would be term discipline where you publish and you stick your default terms and you require approvals or exceptions, Collections cadence where you have weekly calls for, exploring your thirty, sixty, 90, your promises to pay, logged into your system then so on. And number three, you have concentration control and you cap the concentration or or the the proportion that every one of your customers has out of your outstanding, receivables. Right? So you can, and above that, you can you can, trigger credit reviews or you can request partial prepay. So fundamentally, if you think about it, a company that is doing 10,000,000 in sales with a 75 DSO or day sales outstanding has about a couple million locked into their accounts receivable. And that cash can't find is not there to fund payroll. It's not available. It can't fund your CapEx and it can't fund your principal repayments. So the danger is that without a tight aging schedule and without automation, as Mickaël was saying, that trapped cash stays invisible and it underfunds or it it it misses, critical investment or financing, opportunities. So for a company like this, even a five day, day sales outstanding improvement will pretty much, free up about a 130, a 150 of cash immediately. And five days is not heroic. It's just policy clarity for most companies out there. Right? So, that is the situation with days inventory outstanding and receivable. So now about let's talk about inventory because this is another major fault line where cash gets trapped, especially in mid market companies all the time. Most companies will size inventory against their sales targets. Right? And a better way to do it is by projecting out your demand variability. And what you end up with ultimately with, improper inventory forecasting is excess safety stock and slow moving, SKUs that quietly inflate your days inventory outstanding, the average days that your inventory sits on your shelves. So the the the the trick here is to quantify, you know, your excess days, times your average, daily cost of goods sold, for example. And that will give you your cash that is trapped on your balance sheet at every point in time. And that is, a number that can help you reframe how you go about, you know, forecasting inventory, how operations is able to understand that this is not just a finance problem. It's ultimately, an operations problem, and it's very much a strategic problem. And then finally, payables. Payables actually create the the opposite trap. Paying suppliers too early burns liquidity. Right? So paying them too late on the flip side damages your credit and it forfeits, early payment discounts. So how do you manage this, fine balance? Well, ideally, you want your days payable outstanding optimized against your day sales outstanding. Right? So that you can create that positive cash conversion spread, and you do not slip outside supplier credit threshold and you don't incur any penalties at the same time. And that spread really protects your day to day liquidity. So consider that when you put all of these together, your days inventory outstanding, your days payable outstanding, your days sales outstanding, and you run this formula, you end up with the cash conversion cycle which pretty much says this is the amount of time in days that your, capital is stuck inside your working capital cycle. Right? And every extra day of of CCC, of cash conversion cycle can consume tens or even hundreds of thousands in working capital. So a quick, point for everybody here. Your lenders might track your ability to service your debt based on EBIT or EBITDA relative to the total principal and interest obligations. I think if you run that on operating cash flow, you're gonna be surprised because ultimately, they will track on EBITDA, but they will collect payment on cash. And if your operating cash flow can't match that formula, if your operating cash flow cannot come in through a properly engineered working capital cycle, through a managed cash conversion cycle as we're seeing here, every day that your receivables remain outstanding, every early day that you pay your your, payables too early. Every day that your inventory sits on your shelves for too long, ultimately extends the amount of working capital that is stuck in your operation and ultimately reduces your ability to come up with the cash that will satisfy your investment or as I said, your financing obligations. So the reality is most companies will try to manage this entire, working capital cycle and the cash conversion cycle inside Excel. Like Mickaël was saying at the beginning with 15 tab models manually fed by bank statement and, AR and AT reports. But by the time you're done doing that, it's already obsolete. Right? So unless you have automated links to bank actuals, unless you have daily understanding of your cash position and daily forecasting of your future, cash positions, reforecast in real time, you're going to miss you're going to miss, the opportunity to really scale the business and to control your cash flow position. So, Mickaël, can you show everyone at this point how they can get real time visibility and monitoring across receivables, across live dashboards, across flexible KPI selections because I know you guys do that as well. Yeah. Absolutely. And I will keep it short to be respectful of everyone's time, and so that we can conclude the conclude on time. But let me go ahead and quickly show you. So first going back to receivable, just to focus on this aspect of working capital requirement, this is so critical that we've created a dedicated module for accounts receivable automation. And, I mean, most of the time, like, the accounting system and ERPs will have some kind of module for, AR management, but they tend to be, like, not very, well designed and not very well integrated to your cash flow plan. So the great thing here about, Agicap is that we can actually show you real time visibility on your DSO. So here I'm on the analytics dashboard of our accounts receivable automation tool where you see exactly, where you are with your receivable, the ones that are not due due late. You've got a real time aging balance here. And here, you can also monitor, how much progress you've been making on your DSO for the past, for the past month. And, of course, you can drill down and have full visibility on your entire list of receivable, but also see the performance, like the average, historical delay, for all of your top, customers, as well. And this is just, like, to monitor where you're at and where, you need improvements on your DSO for some categories of customers or some specific customers. But the point is also to act upon it, right, and making sure that you get better at collecting, the cash from your customers. And so for this, we also have, a module to create sequences, multichannel sequences, so you can, follow-up, with your with your customers and making sure you get paid on time. So you can create, this, advanced sequences using multiple channels. So it's a mix of automated emails, some some calls to make sure that all your customer, gets reminders for payment. And they can also have the opportunity to see the detail of the late invoice. And in some countries, also have the opportunity to pay directly, from the email follow-up. So that's how you can get your accounts receivable, under control in a tool like Agicap, but also make sure that it's fully in sync with your cash flow plan. Because for the forecasting, we will leverage this historical DSO for all of your customers to refine your forecast and take this historical data into account instead of the due date, that you can see on the on the invoice. And quickly, just to finish on the reporting and making sure that you also have, like, good visibility on all the KPIs, that you mentioned, Oana. Agicap offers advanced reporting capabilities with for some out of the shelf dashboard, but these are dashboards that you can also refine and make sure that you monitor all the KPIs that matters to your business, natively here. But this is data that you can also export to your BI tool if you use a tool like Power BI or Click or whatever you want. We you can, easily export your Agicap data to this third party BI tool as well. And, of course, you can also export, your data in a few clicks into Excel and have, like, up to date Excel tables and charts so that in one click, you have a clean, Excel based, cash flow plan that you can share with your banker or with any external investor or or stakeholders that does not have access to your Agicap account. So we we still bridge the gap with Excel as and all of the people still love love Excel, for for sure. There you go. That's fantastic, Mickaël. Thank you for wrapping us up there. And, thank you, everyone for, joining today. Definitely, definitely get in touch and, and book a, this is how you can find me online. You can, find me on LinkedIn or you can, send an email at [email protected]. But most importantly, this is how, you can get in touch with Agicap and this is how you can ultimately, you know, book a demo to learn more and, make it so that, you stop having cash flow blind spots forever. And, between your immediate midterm and long term cash flow planning and cash flow strategy, you're covered across the board. So thank you everyone, for joining us. Mickaël, I'll pass it over to you. There's still, questions, that we received. I don't know if we have time or if you plan to get back to everybody via email. Yeah. We will follow-up. We will follow-up for those who ask question on the chat. Stephanie, Pena, for example. Yes. I will be at Sweet World, so I will, connect, separately on on LinkedIn or via email so we have a chance to meet in person. And, also, we have an an event coming up, in Austin, Texas on October 28. So for those of you in the Texas area, and I know we had some people saying they were in Austin, please, come, to this event so we have an opportunity to to talk face to face. And for all the others, yes, you can go on our website, request a demo. Happy to take you through the tool one on one and really, show you how we can adapt to your specific cash flow management challenges, leveraging all the best practices that we've learned from you, Anna. So thank you so much for this very insightful session today. Thanks for to all of you. Thank you, everyone, for joining. Alright. Thank you. Bye bye. Everyone. Thank you. All good.