This is the net cash flow month by month for one newsagency for the three magazine distributors (Gotch, Network and NDD) and two main magazine publishers. We have separated these publishers out because including their data with that of their respective distributors skews the results.
The summary and magazine title level reports which feed data to this graph run to 80 pages. For each month for each magazine there are four columns of data: sales this month; stock expenses this month (last month’s invoices less last month’s returns; operational expenses this month (reflecting the cost of real estate and labour at the title level); and, net – which is graphed. Supporting this is magazine sell through data – so there are many angles from which the situation can be analysed at the newsagent level.
The graph and associated reports are produced by software created by my company.
I have analysed cash flow using this new approach for two newsagencies with another eight to be considered this week. I suspect that many more than this will need to be analysed for reasonable conclusions to be reached.
This project began because too many newsagents were reporting being in a cash crisis. Good newsagents of long standing. While they suspected and complained about magazines, none had hard evidence. Sell through rates alone do not provide the full picture – at least not the picture their respective bank managers required. At least one of these newsagents now has evidence crucial to making a case of attention from their suppliers.
While most businesses can manage their cash because of the operational controls they have, this graph demonstrates the considerable swings month to month experienced by newsagents. Newsagents have inadequate control over supply and return and therefore over the cash impact. These huge swings make it challenging for newsagents to manage their cash well and they are heavily penalised by some companies when late – setting in chain a domino effect which can take months to recover from. The graph also demonstrates a considerable negative cash flow – to an extent that many newsagents have to borrow to cover cash requirements.
I am hopeful that once the report is finessed we will be able to sit with the magazine distributors and discuss the cash flow implications of current arrangements and consider more equitable arrangements which take into account labour and real estate costs for low selling and long shelf life products as this is where the most cash damage is done.