The Importance of Cash Flow Management – Video

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cash on scale

Cash flow management entails balancing your cash inflows with your cash outflows, so the cash side is always slightly higher!

Cash is king, especially for small and medium businesses (SMBs), which do not have access to capital markets. An unprofitable company with cash can limp along for years, but a profitable company without cash will fail in a few months. How is this possible?

Cash Flow

Your business uses cash and cash equivalents to pay its bills. A somewhat unprofitable company (i.e., a 10% net loss) that requires customer deposits, pre-pays, and/or payment at the time a service is delivered for all its sales, will have positive operational cash flow. Money it can use to pay the bills. A company that requires no deposits, pre-pays or payments when the service is delivered, that has accounts receivables that are 90-150 days outstanding, will be hurting for cash. Literally. Hurting. Where’s the money to pay the bills? Even with that 15% profit? It’s in the A/Rs! Or it’s in the inventory.

Video

Watch the video to find out; in addition, access insights and tips for managing cash. Cash flow management is the methods you use to manage all aspects of your cash flow – operational, financing, and investing. For stable, steadily growing businesses, operational cash flow is the primary focus. For rapidly growing businesses or start-ups, all three sources and uses of cash are significant.


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