• SumoMe

Knowing exactly where you stand financially – i.e. your cash position – means that you don’t have to wonder “do I have enough money to cover my rent and wages this month?”  The health and vitality of your business are dependent upon your ability to cover all tax obligations, payments to suppliers and operational expenses as they come due in your business.

Unfortunately, knowing where you stand is not as simple as looking at your bank balance or your net profit.  Your bank account merely shows your cash on hand but it will never tell you what your cash flow is or (more importantly) HOW to improve it.

Cash and cash flow are not the same thing.  Cash flow is about the movement of cash in and out of your business as it operates over a period of time.

This distinction is crucial to your success – if your company is profitable on paper yet it maintains a negative cash flow for an extended period of time, eventually it will go under.

But what does this mean for you and your business?

Essentially it means that, “cash flow is King”.  You cannot afford to run your business by simply printing and looking at your Income or Profit and Loss statement each month. Being able to calculate and monitor your cash flow position regularly is critical to your company’s health and survival.  You can have the most brilliant product or service but if you don’t have positive cash flow, your business will eventually go under.

If you want to learn more about this topic “Finding the Point in business” – improving both your profitability and cash flow, I recommend that you check out Chapter 1 of Financial Foreplay.

ImagineeringNow
About The Author
Rhondalynn's life changed forever after the loss of her mother due to a senseless tragedy in 1992. She decided that despite her formal training and a promising career as a lawyer and chartered accountant, she wanted to do something more. So despite the fact she had already invested 10 years of her adult life in university and articling, she did the unthinkable. She left her high paid job as Commercial Manager for one of the largest corporations in the country, she re-trained herself in the sciences of the mind and she discovered a passion for writing and sharing her knowledge with business owners and executives. Rhondalynn has distilled the secrets to business success - that she learned from her life experience and working in GM level roles with Price Waterhouse Coopers, Max Factor, Village Cinemas, and Coles Group Ltd. - and produced a simple step-by-step process that you can apply to your business to boost your sales and bottom line. Rhondalynn can help you put strategies in place to grow your bottom line and ensure that your customers would never think of going elsewhere. She is the leading expert on harnessing the power of your brain and using it to improve your financial results in business. Rhondalynn is the author of On The Shoulders of Giants, Imagineering Your Destiny, Sobre Hombros deGigantes, Financial Foreplay, and Sales Seduction. She has appeared on CNN, Bnet/CBS, Channel 7, Channel 9, Kochie's Business Builders and 3AW, and writes for Yahoo, MYOB, Fast Thinking, Sunday Life, Dynamic Business, Business Spectator and Australian Retailer.

2 Comments:


  • By Annette Janquard 28 Aug 2011

    So true. I see so many businesses owners trying to find answers by looking at their cash position or cash position estimate. Even the acccounting programs – like Xero and MYOB – get it wrong by incorrectly referring to a cash position estimate as cash flow. Bit misleading really…

  • By Harvey Dent 07 May 2013

    Magnificent post ! So true – as much as we like to protest, it’s hard to sustain a business when it isn’t making profit and cash flow!

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