Step 5: Common-sense cash flow -- connect operations to bank-account activity

Step 5 shows how the discovery of the Mobley Matrix changed the course of American business and provided a way to know what is really happening — and even going to happen — in the bank account.

In 1980, Lou Mobley began lobbying FASB, ABA, SEC and other organizations to provide a statement of cash flows that was usable and effective for non-financial leaders in managing the bank account and building cash reserves. In November 1987, FASB approved regulation No. 95 governing cash flow reporting. FASB 95 calls for showing three different kinds of cash flow activities (operating, investing and financing) presented in two different formats (direct and indirect). Mobley believed a pure cash statement (called the direct format) should be made available to entrepreneurs and investors. In the last day before approval, internal politics made the direct format voluntary but “highly encouraged.” To this day, most American businesspeople have never seen a direct statement.

The cost of useless cash statements (the indirect format in which there are no operating cash accounts) is an estimated loss of 20 to 35 percent of operating cash flow every day in businesses of all sizes.

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