Category Archives: Cash Flow

The Cash Flow

Photo by: Dmitry Yatsenko

Photo by: Dmitry Yatsenko

The flow of cash: keep it coming in regularly for what’s called “sustainable cash flow” in business. The principles for creating sustainable cash flow are useful for individuals as well as businesses. Cash is necessary to provide for our daily personal and business needs. The principle is always the same: if the money coming in is more than the money going out, you’ve got positive cash flow. If the money coming in is less than the money going out, it’s negative cash flow. In business, this means considering customers who pay you and vendors you pay. The simplicity of the concept may tempt us to believe one of two fallacies: first, that lots of cash coming in means “big profit”; and second, that slow cash flow means our products are not profitable. This is where we engage our basic mathematics to learn about sustainable cash flow. Everyone wants it; some understand how to strategically plan for it; and fewer exercise the consistent discipline to really make it work. As author Jim Collins points out in his book How the Mighty Fall, “Organizations don’t die from lack of earnings. They die from lack of cash” (2009). Anyone can learn the principles for creating sustainable cash flow and implement them starting today.

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