Our weekly leadership scorecard shows that almost all of our delivery and sales metrics are consistently meeting their targets, but our bank account balance is dropping week over week and we are constantly stressing about payroll. How do we fix a scorecard that looks healthy on paper while our actual cash flow is in a crisis?

Question

Tyler Smith · Accepted Answer

Your sales and delivery teams are hitting their targets, but your cash is evaporating because you are tracking activities that ignore the absolute lifeblood of the business: cash flow velocity. When a scorecard is green but the company is hurting, you have designed a scorecard that measures effort rather than cash reality. To fix this, you must immediately introduce cash specific leading indicators to your leadership scorecard. Do not wait for your monthly profit and loss statement to tell you that you are out of money. Instead, track metrics that directly predict cash incoming and outgoing over the next thirty or sixty days. For example, instead of just tracking project milestones completed, add a weekly metric for invoices sent within twenty four hours of delivery, the dollar amount of receivables outstanding over forty five days, or the weekly total of customer billing disputes initiated. By putting these cash conversion metrics on your weekly scorecard, you force your leadership team to look at the financial consequences of their operational activities. Ownership of these numbers must be crystal clear on your Accountability Chart™. Typically, your Integrator or financial lead must own these cash velocity metrics. When these numbers start trending red, you immediately drop them to the Issues List and use the IDS® process to find out why cash is bottlenecked. Stop tracking empty activities that do not convert to cash in the bank.