WorldWide Drilling Resource®

Drilling Into Money Not Boring by Mark E. Battersby Cash Flow Strategies and Profits Cash flow is the lifeblood of every business. In fact, according to a U.S. Bank study, poor cash flow management causes 82% of U.S. business failures. Although seemingly counterintuitive, many experts advise putting cash flow management before profits. While profits are how a drilling business survives, failure to manage the operation’s cash flow can mean running into problems that one profitable accounting period might not be able to offset. In essence, cash flow is nothing more than the movement of money in and out of the drilling operation or business. Obviously, accelerating cash inflows improves overall cash flow. After all, the quicker cash can be collected, the faster the business can spend it. Put another way, accelerating cash flow allows a drilling operation to pay its own bills and obligations on time, or even earlier than required. It may also allow the business to take advantage of trade discounts offered by suppli- ers. Outflows are the movement of money out of the drilling business, usually as the result of paying expenses. An important key to improving the drilling operation’s cash flow is often as simple as delaying all outflows of cash as long as possible. Naturally, the operation must meet its outflow deadlines and obligations on time. Yet another option might be frugali- ty. Aiming to keep the drilling operation lean, evaluate it. Is the purchase of new equipment really necessary? Is hiring new employees really cost-effective? Weighing the pros and cons of all busi- ness needs and wants enables the drilling operation or business to retain cash flow and avoid unnecessary expenses. Any business, large or small, can experience a cash flow gap - it doesn’t necessarily mean the business is in financial trouble. In fact, some cash flow gaps are created intentionally. That is, a business owner or manager will some- times purposefully spend more cash to achieve some other financial result. A business might, for example, purchase extra inventory to meet seasonal needs, to take advantage of a quantity or early- payment discount, or might spend extra cash to expand its business. Every business can improve its cash flow. Of course, for this to happen, they need to adopt best practices in the way they invoice, follow-up with customers and regulate the business’s outflows. Without the help of a qualified profes- sional, many best cash flow practices may be difficult to achieve or worse, overlooked. Mark Mark E. Battersby may be contacted via e-mail to michele@ worldwidedrillingresource.com April 15-17, 2020 Spearfish, SD Spearfish Holiday Inn Convention Center Phone: (605) 642-4683 • (800) 999-3541 For room booking use group code: BIW www.holiday-inn.com/spearfishsd James McNulty: (605) 786-4959 • bitwconference@gmail.com Dr. Purushotham Tukkaraja (PT): (605) 430-4880 • pt@sdsmt.edu For more information, or to register online, go to: bitwconference.org Tuesday: Registration and early exhibit set-up (after 10 am or before noon on Wednesday). Wednesday: Regulatory Session, Crazy Horse Mountain Tour, Paul Muehl ScholarshipClay Shoot, BobMartinScholarship Golf Scramble, Primer Hour, Whole Hog Roast. Thursday: Technical Sessions, Booster Hour, Banquet, Scholarship Auction. Friday: Technical Sessions. Booths close after 10 am Coffee Break. Conference ends after lunch. Everyday: Exhibitor Boothswith the latest inBlasting Technology and Products, Lunch, Door Prizes, and much more! Blaster recertification credit hours available for Wyoming and many other states! See you there! 8 FEBRUARY 2020 WorldWide Drilling Resource ®