Helen

Why You’re Still Not Getting Timely Financials — and How to Fix It linkedin.com/pulse/why-your…

@RashelHariri @Spotify @ApplePodcasts @YouTube @emmagmay

I was tired of tech bro podcasts and 'alpha males' dominating the podcasting industry, so instead of complaining about it, I launched my own podcast 💅 Here's the trailer for She's Interesting! Subscribe on @Spotify @ApplePodcasts @YouTube #podcast #podcasting

@SecretCFO i’d love to see you include 1. how much cash balance to maintain be size of biz / wcap needs eg. 10% of Rev 2. how to operate managing cash flow eg review cadence 3. FX and risk 4. how to engage / motivate the business in contributing to cashflow goals . I wld love to contribute

Next series of CFO Secrets will be on cashflow. Draft running order: 1. Intro 2. Measuring cash flow 3. Forecasting cash flow Part 1 4. Forecasting cash flow Part 2 5. Working Capital - why it matters 6. Working capital - making it better 7. Maintainable Free Cash Flow 😍🥰 8. Creating a Cash Culture What am I missing?

@SecretCFO And hence the value in quality monthly management accounts and regular inventory control / reconciliations to ensure an accurate working capital position month on month. Great explanation btw :-)

How does working capital in M&A work? It's complicated, but I'll try and explain in 2 minutes. When you make an offer to buy a business, this is normally an 'Enterprise Value.' This means your valuation assumes: - zero cash - zero debt, and - normalized working capital. The principle being that the final purchase price will be trued up $:$, based on the actuals. So what does normalized working capital mean. Imagine we are buying a business that manufactures halloween costumes. Painfully seasonal. Manufactures 12 months of the year, but makes all of its sales in one month. If you assume all inventory is sold during October on 30 day payment terms, it's month on month working capital profile might look like this: Now let’s think about what happens to Net Working Capital (NWC). NWC = (Accounts Receivable + Inventory - Payables). It grows over the course of the year, before crashing down in November. And the cycle restarts. The purchase price of this business should vary based on the point in the year when the deal completes. This is where ‘normalized working capital’ comes in. Also known as the ‘peg’. It's kinda like, the average level of working capital needed to operate the business. The peg is the level of NWC assumed in the enterprise value of the business. There is then a ‘true up’ between the actual working capital at closing date, and the peg. Back to our example: The dotted red line shows the ‘peg’ and the hard red line shows the actual NWC. A transaction that closes in September, results in the buyer paying the seller extra $ above enterprise value. Where a transaction that closes in December, the reverse is true. The seller owes the buyer. This will be calculated $:$ as the working capital that gets transferred below the peg. The start point of the peg, is normally the average NWC for the last twelve months. But in practice there is lots of nuance here, and its poorly understood. If you are a jedi in negotiating working capital in M&A, this can be worth an additional 1-3% of total value in a deal. At the very least, make sure you aren't on the wrong end of it.

@SamMendelsohn4 @TaylorHoliday yep we’ll do it for you!

@TaylorHoliday yall do it for me? or the software does it?

Does anyone have an inventory forecasting/planning consultant/agency they like working with?

@yourimosko @SamMendelsohn4 @goprediko our team aims to fill the skills gap - an independent view we support decision making, look at the big picture and find appropriate working capital to help companies scale. Often brands are buying new styles and SKUS where strategy (and the art!) plays a bigger role than data

@SamMendelsohn4 @goprediko this is actually a product problem (UX) imo. it should be easy to understand the data you're getting and how to best take action on the back of it. something we've worked hard on at @goprediko which is why we have migrated dozens of their customers and none have gone back.

@willstew @SamMendelsohn4 thanks @willstew Hi @SamMendelsohn4 i’m currently building a BI tool for @Shopify businesses for merchandising and demand planning and also do consulting with brands to support or lead their strategic and demand planning

@willstew genius level innovation here. The office is MUCH cooler @NASA watch this space

@emmagmay @willstew is this a bid to get Sparky to like you more? the jealousy route…

#dailyfrank enjoying cool grass and warm sun.

Taking on the big guys @willstew

“The real feedback comes after you ask for money” @imackinn #startupcanada @startupcanad

@ChaseLarabee 1. Look at competitor pricing 2. Consider returns % 3. Discounting strategy - yours & competition 4. Don’t feel like you have to stick to a price - ultimately it’s what someone is prepared to pay

Question for Ecommerce operators: If you have an amazing product with extremely good COGS, how do you go about thinking where to price? For example: let's say with a $45 retail or $50 retail the gross margin only moves by .5%. Do you price lower in hopes of higher volume?

@drewfallon12 @ChaseLarabee I would also add that the definition of fixed via variable can also depend on the size of the biz. For example smaller D2C biz tend to have higher “fixed” vs variable marketing spend eg ad agency vs FB spend. The smaller biz still has a lot of operational gearing to go.

people on twitter with no formal accounting or finance background/training seem to love to complicate a contribution margin if its a fixed cost, it’s below contribution margin this is why contribution margin is not measured in %, but in $ the whole point of contribution margin is deduce a breakeven revenue point given a certain amount of fixed overhead. it’s a managerial accounting metric

Let me explain why everyone in DTC came up with what are now fake metrics like: LTV CAC Payback period These metrics do not work in CPG like they do in SaaS, and its why acquirers don't look at them. In short, it is because we wanted to be valued like SaaS. Let me explain👇👇

@_robsteel No but I might know someone who does…I’ll check back in

Hey COOs, CFOs, does anyone have any recommendations on the best app to manage Revenue Recognition in Xero?

@willstew @vailmtn Laps tomorrow then?

When you’re 2 favourite apps hookup @Strava ❤️ @Spotify

Around the table today. CEO, CFO, 2x investors. All female. Does gender matter? It matters. That was the first time in my 20+ year professional career. @emmagmay

@AliTheCFO @andrewglynch Nice reply ;-) I’m in

@HelenAstle @andrewglynch Not at all Women are more than welcome! @andrewglynch can you check your DMs? We can get this started with Helen, Drew, you and me.

are there any good cfo / coo communities? slack groups, networking conferences, etc🙂

@willstew @SamMendelsohn4 There are a couple of apps on Shopify where you can A/B test pricing. However you’ll need a decent budget to get a big enough data set. I’d prob first look the distribution curve on AOV and other data on add2cart etc first before spending the traffic $$

Has anyone been able to measure the affect of lowering or raising prices on CAC? Our margin is solid but CAC is terrible

@drewfallon12 Interested