The financial life of most start-ups -- not to mention plenty of established companies -- requires working without a net. This one-page flash report keeps AutoLend from needing one

Tracking a fast-growing company's finances may be essential, but it's never easy. In the start-up phase, when financing options are few and income streams are erratic at best, it's downright intimidating.

Steve Simon knows that firsthand. As the chief executive of AutoLend Group Inc., a used-car-financing company based in Miami Beach, Fla. (see "Plan Early for Profitable Growth," [Article link]), he was seeing astronomical growth. AutoLend had logged $24 million worth of revenues by last March 31, when its first fiscal year ended. Since the growth was funded entirely out of cash flow, "it was essential for us to know exactly what was going on and what each day's financial picture looked like," explains Simon.

The CEO was determined to set up a good monitoring system from day one -- a discipline he had learned in his first job, working for his grandfather's financial-printing company. "There was so much information to keep track of that I learned early on how important it was to be extremely focused and avoid surprises." That was especially true, he believed, in a start-up. But Simon was uncertain at first about the best way to do it. His early efforts to keep tabs on AutoLend's numbers ran to 15 pages, which was unworkable. So he got together with his senior staffers to figure out "which key numbers we really needed to keep closest track of and how to put them all on a page in a way that would maximize their utility for us."

Thus, AutoLend's "Daily Flash Report" was born. Each morning by 7 -- at the latest -- Simon and his chief operating officer, chief financial officer, controller, collection manager, and several other top staffers all receive copies of the updated results. The daily flash becomes the centerpiece of their 9 a.m. meeting (which might last from 15 minutes to two hours, depending on the day's challenges).

But why daily? Simon maintains that when senior management so obviously cares so much about the nickels and dimes, the whole staff gets the message. Also, the daily reports help him pinpoint trends early. "I can detect troubling or potentially profitable patterns after just two or three days of watching numbers. If I couldn't detect those trends until I received a weekly report, I'd lose days' worth of opportunities."

A case in point: "Four months ago we started to see over a few days a pattern in which our daily cash -- our collections -- were down. I called my collection manager immediately, and he started contacting our collection representatives to figure out what was going on. Within 40 minutes we discovered that the problem was not a slowdown in collections but a glitch within our computer software. Half an hour later, it was fixed."

How bad might things have become if the problem had gone unnoticed for a week or two? "We might have begun to doubt the effectiveness of our collection staffers -- or alienated our customers by hounding them for payments they'd already made. Both would have had negative consequences for us as a start-up, when we're trying very hard to build the right reputation."

The CEO believes that without the day-by-day bulletins, AutoLend would not have grown so rapidly. He's so serious about watching daily results that the flash report is faxed to him whenever he's traveling for business or even on vacation. "If a payment is one day late, will it go into default? Probably not. If it's a week late, it may well do so. Where's the transition? The more closely I watch, the better chance I have of keeping my defaults -- and losses -- as low as possible."

But don't AutoLend's staffers find the regimen a bit, well, excessive? Not so, says Simon. At weekly lunch-with-the-boss meetings, employees say they're "enamored of the fact that everybody is on the same page at the same time."

* * *

Sample AutoLend Tracking Sheet:

* * *


Daily Flash Report

Day: ______


I. Cash and Investments As of As of

Today Yesterday

Total Cash $_____ $_____

Total Short-term Investments $_____ $_____

II. Payroll As of Same Day

Today Last Year

Total # of Employees ______ ______

No. of Full-time Equivalents ______ ______

Most recent payroll period expense $_____ $_____

III. Receivable Financing

Daily M-T-D Y-T-D

Loans outstanding ($) $_____ $_____ $_____

Loans outstanding (#) ______ ______ ______

# of Dealers Approved ______ ______ ______

# of Dealers Active ______ ______ ______

Applications rec'd ($) $_____ $_____ $_____

Applications approved ($) $_____ $_____ $_____

Applications rec'd (#) ______ ______ ______

Applications approved (#) ______ ______ ______

In Delinquency ($) $_____ $_____ $_____

In Default ($) $_____ $_____ $_____

In Delinquency (#) ______ ______ ______

In Default (#) ______ ______ ______


Daily M-T-D Y-T-D

# of Dealers Approved ______ ______ ______

# of Dealers Active ______ ______ ______

# of Pending Applications ______ ______ ______

Total Approved Credit $_____ $_____ $_____

Total Credit Used $_____ $_____ $_____

* * *

Simon says: Track your start-up's numbers daily.

"This number -- cash on hand today -- tells me how much we've collected from the used-car dealers and customers we've lent money to. Since we're often dealing with 'credit-challenged' customers, I watch total cash closely to ensure that our collection efforts are working and to be sure we've got the cash to meet our daily operating costs."

"Comparing today with yesterday is a great indicator of potential problems. If I see that today's cash position is the same as or lower than yesterday's, that tells me our collection efforts have stalled, and I'm going to want an explanation from my collection manager."

"The relationship between numbers is just as important as the results themselves. We've got very clear goals about how these numbers need to relate for us to achieve profitable growth. For example, if cash seems too low while defaults are high (and loans outstanding remain constant), that's a problem we've got to address immediately, maybe by hiring more collection staffers or tightening our credit-approval procedures."

Short-term investments, which AutoLend uses as the equivalent of a cash-management account, can be cashed in if necessary to support business activities. "But if this category is down and I haven't authorized any transactions, I'd want to know who's cashing in T-bills without my consent."

"Payroll trends are a quick way to quantify corporate growth, so I compare today's numbers with those one year earlier. I'm also looking at how our employee numbers compare with total payroll expenses and other key results (such as loans outstanding) to make certain we stay within industry norms."

This number is the equivalent of sales, because AutoLend's loans become revenues as soon as they're collected. Why watch the number of loans, too? "If our dollar volume remains high but the number of loans drops, I'd want my credit manager to assure me that we weren't risking too much on any particular loan."

"It's important to track customer applications in number and dollar volume, because our future growth will come from any applications we approve. If these numbers didn't meet our goals, it would mean our sales-development efforts weren't working. As a start-up, you've got to figure out how to track sales development also."

"We're in a high-risk business, and these two numbers [In Delinquency ($), In Default ($)] are my best indicators of how well we're controlling our risks. To us, it's important to make a distinction between in delinquency -- the 'warning' category any customer enters when late on a payment -- and in default, which is when we take any steps necessary, including repossessing cars, to protect our financial interests."

"This is a new business effort for us, lending to used-car dealers directly, rather than to their customers. By breaking the results out separately, we can start to learn to predict trends and figure out how to set realistic growth goals."