~4 minute read

One of the most impactful ways that financial advisors and client relationship managers can bring value to business clients is by providing helpful information and lending advice pertaining to cash flow management and strategy.

As a measure, cash flow is a reflection of how a business is managing its cash position, encompassing the day-to-day activities that impact cash inflows and outflows.

When a business is managing their cash flow effectively, they possess potential for growth, and pose lower risk to the bank, meaning they’re more likely to contribute positively to their financial advisor’s portfolio (and, ultimately, the bank’s) success.

Read more: Deliver the Data that Helps Advisors Assess Risk, on Demand

Assessing cash flow and making informed recommendations to business clients, financial and banking relationship managers requires seamless access to a business’ financial data.

Typically, advisors and relationship managers are required to sift through a client’s statements in their software or through downloaded documents and make calculations to determine the business’ current cash flow state.

With AutoQL embedded in the systems financial advisors already use to manage client portfolios, advisors can easily streamline the process of performing these types of assessments by leveraging a conversational solution for data access.

Bar graph returned for user query show me outstanding debts for Treeline Lumber Ltd

It’s easy to assess risk and understand client cash flow with intuitive access to the information that reveals the true story about a business.


For example, a client relationship manager might be advising the owner of a medium-sized lumber company on managing cash flow during an economic downturn. The lumber company needs to maximize their cash flow or look into applying for a loan through the bank to ensure that they can continue to grow their business

The relationship manager wants to take a look at the company’s cash flow adequacy ratio as well as operating cash flow margin to see how likely it is that the company will be able to continue operating at their current cash flow state, and where they can make adjustments to their operations to improve their cash flow going forward.

These ratios are usually calculated with numbers that client relationship managers might have to hunt around for in their clients’ statements.

Read more: Empower Impactful Data-Driven Cost Management Strategies

The cash flow adequacy ratio reflects whether cash flow generated by operations is enough to cover a business’ ongoing expenses. For this ratio, the advisor needs to find total cash flow from operations and divide that number by the sum of long term debt paid, fixed assets purchased, and cash dividends distributed.

The operational cash flow margin is a profitability metric that reflects how well a company’s daily operations can transform sales of their products and services into cash. The advisor needs to use the total cash flow from operations once again, and this time divide that number by net sales.

Cash Flow Adequacy Ratio and Operating Cash Flow Margin equations

Typically, these calculations are done manually. With AutoQL, users can just ask for the ratio and the answer is returned immediately.


Without needing to hunt down or add up any numbers to calculate these ratios, the relationship manager can just ask “What is the cash flow adequacy ratio?” or “Show me operating cash flow margin” This will give them an initial overview of the current state of cash flow and profitability that they can explore further, in the moment, with questions like “What is the current cash on hand?” or “Show me operating cash flow vs. net income YTD”

They can even ask questions like “Show me client X loan history” or “Show me current outstanding debts for client X” to dig deeper into whether the client is a good candidate for a future loan.

With this information at their fingertips, the advisor or client relationship manager can make recommendations to their client moving forward about improving their cash flow from operations by improving the management of current assets and liabilities. Through this process, the advisor can also determine whether a client is eligible to be approved for future loans or lines of credit.

For banks with proprietary or legacy software, adding increased flexibility in data access and analysis workflows will decrease the amount of time and labor spent doing data discovery, time that can be reallocated to helping clients navigate opportunities, effectively manage operational and credit risks, and strategically expand the portfolios of customers.