Quick Reference Guide: Cash Flow Signals & Solutions
Startup Companies
Key Cash Flow Signals:
- Negative operating cash flow
- High cash burn rate
- Minimal revenue
- Significant working capital needs
- Limited access to debt markets
Primary Banking Solutions:
- Working Capital Support
- Invoice factoring
- Bridge loans
- Purchase order financing
- Growth Enablers
- Equipment leasing
- Venture debt
- Seed capital advisory
- Must-Ask Questions:
- “What is your monthly cash burn rate?”
- “How many months of runway do you currently have?”
- “What specific equipment or resources do you need to reach your next milestone?”
Growth Companies
Key Cash Flow Signals:
- Rapidly improving operating cash flow
- High working capital consumption
- Significant CAPEX needs
- Emerging acquisition activity
- Increasing access to debt markets
Primary Banking Solutions:
- Operational Acceleration
- Trade financing
- Supply chain financing
- Receivables financing
- Expansion Support
- Equipment financing
- Acquisition loans
- IPO preparation
- Must-Ask Questions:
- “What is limiting your growth rate today?”
- “How are you financing your inventory buildup?”
- “Are you considering acquisitions in the next 12-24 months?”
Mature Companies
Key Cash Flow Signals:
- Strong, stable operating cash flow
- Optimized working capital
- Moderate CAPEX (mostly maintenance)
- Strategic acquisitions
- Well-structured debt profile
- Significant shareholder returns
Primary Banking Solutions:
- Efficiency Optimization
- Cash management systems
- Treasury services
- Working capital optimization
- Capital Structure Optimization
- Bond issuance
- Dividend funding strategies
- Share repurchase programs
- Must-Ask Questions:
- “How are you returning capital to shareholders?”
- “What is your approach to strategic acquisitions?”
- “How are you managing excess cash?”
Early Decline Companies
Key Cash Flow Signals:
- Decreasing operating cash flow
- Working capital release (shrinking)
- Reduced CAPEX
- Divestiture of non-core assets
- Focus on debt reduction
Primary Banking Solutions:
- Business Stabilization
- Working capital compression strategies
- Debt restructuring
- Asset-based lending
- Strategic Repositioning
- Divestiture advisory
- Operational efficiency financing
- Covenant renegotiation
- Must-Ask Questions:
- “Which business units remain strong performers?”
- “What assets could be sold to strengthen the balance sheet?”
- “How are you adjusting your cost structure?”
Decline Companies
Key Cash Flow Signals:
- Negative operating cash flow
- Aggressive working capital liquidation
- Minimal CAPEX
- Significant divestitures
- Debt restructuring needs
Primary Banking Solutions:
- Liquidity Preservation
- Distressed financing
- Crisis cash management
- Inventory liquidation financing
- Restructuring Support
- Debt workout solutions
- Asset divestiture services
- Creditor negotiation support
- Must-Ask Questions:
- “What is your timeline for stabilizing cash flow?”
- “Which assets could be monetized quickly?”
- “Have you engaged restructuring advisors?”
Simple Diagnostic Tool: The 3-Question Assessment
For each client, ask these three questions to quickly identify their life cycle stage and primary needs:
- Cash Flow Direction: “Is your core operating cash flow positive and growing, stable, or declining?”
- Growing = Growth Stage
- Stable = Maturity Stage
- Declining = Early Decline Stage
- Strongly Negative = Startup or Decline Stage
- Capital Allocation Priority: “What’s your top priority for using available cash right now?”
- “Building our business” = Startup/Growth
- “Optimizing returns” = Maturity
- “Strengthening the balance sheet” = Early Decline
- “Ensuring survival” = Decline
- Working Capital Trend: “Is your working capital investment growing, stable, or shrinking?”
- Growing rapidly = Startup/Growth
- Stable/Optimized = Maturity
- Actively shrinking = Early Decline/Decline
The Cash Flow Spotlight Approach
Instead of overwhelming analysis, focus on the ONE cash flow component showing the most significant change:
If Core Operating Cash Flow is the spotlight:
- Improving rapidly? Offer cash management optimization (Growth)
- Strong and stable? Offer treasury services and cross-border solutions (Maturity)
- Declining? Offer operational efficiency financing (Early Decline)
- Negative? Offer working capital credit lines (Startup) or crisis management (Decline)
If Working Capital Cash Flow is the spotlight:
- Growing rapidly? Offer supply chain financing and factoring (Growth)
- Optimized but large? Offer dynamic discounting and vendor management (Maturity)
- Shrinking intentionally? Offer inventory reduction financing (Early Decline)
- Liquidating? Offer inventory liquidation support (Decline)
If Capital Expenditure is the spotlight:
- Aggressive growth investing? Offer equipment financing and real estate loans (Growth)
- Selective investments? Offer maintenance capex facilities (Maturity)
- Minimal spending? Offer sale-leaseback arrangements (Early Decline/Decline)
- Initial infrastructure? Offer equipment leasing and venture debt (Startup)
If Investment Activities is the spotlight:
- Acquiring competitors? Offer acquisition financing (Growth/Maturity)
- Divesting units? Offer divestiture advisory (Early Decline/Decline)
- Strategic partnerships? Offer partnership structuring (Growth/Maturity)
- Intellectual property? Offer IP financing (Startup) or licensing support (Decline)
If Debt Activities is the spotlight:
- Accessing new markets? Offer bond issuance support (Growth/Maturity)
- Optimizing terms? Offer refinancing solutions (Maturity)
- Potential covenant issues? Offer covenant renegotiation (Early Decline)
- Severe challenges? Offer debt restructuring (Decline)
- Initial funding? Offer convertible notes (Startup)
If Equity Activities is the spotlight:
- Preparing for IPO? Offer pre-IPO planning (Growth)
- Returning capital? Offer dividend optimization and share repurchase (Maturity)
- Seeking new investors? Offer strategic investor search (Early Decline)
- Considering rescue? Offer private equity rescue options (Decline)
- Early funding? Offer venture capital connections (Startup)
Conversation Starters by Stage
Startup Stage
“I notice you’re investing heavily in building your business. Many startups at your stage benefit from our equipment leasing options that preserve cash while giving you the tools to grow. Is equipment financing something you’re considering?”
Growth Stage
“Your rapid sales growth is impressive! Many companies in this phase find that managing working capital becomes challenging. Our supply chain financing program could help you extend payment terms while keeping suppliers happy. Would that be valuable to your operation?”
Maturity Stage
“With your strong cash generation, many similar clients are focusing on optimizing returns to shareholders. Our treasury services could help maximize the efficiency of your cash while supporting your dividend and share repurchase programs. Is that aligned with your priorities?”
Early Decline Stage
“I’ve noticed some changes in your industry. Many clients in similar positions are focusing on strengthening their core business while divesting non-essential assets. Our divestiture advisory team could help identify opportunities to reallocate capital to your strongest segments. Would that be helpful?”
Decline Stage
“In challenging market conditions like these, preserving liquidity becomes critical. Our crisis cash management solutions have helped many clients navigate similar situations while preparing for recovery. Would it be helpful to discuss how these might apply to your situation?”
