Who needs to be concerned about cash flow?

As a business mentor, you feel that you have heard all the excuses from senior managers why they do not watch their cash flow and look to the future. Pick from the following list:

  • My accountant says I am making a profit
  • I have loads of sales pouring in
  • I am too scared / I don’t do numbers
  • The business is too complex – too many uncertainties
  • I can see what happened in the past
  • Too busy
  • A.N. Other

If we have to watch our home finances, the same rules apply to our commercial world. No matter how positive things look around you as a decision maker and no matter if you prefer to be doing something else, you have to recognise that the cash flow situation does not go away. Be ready for the nasty surprise.

To be specific, it is essential to have a grasp on where you are going, both in the short term and in the long term. And this golden rule applies to each and every operation, no matter what their size is.

In the past week, I have visited successful businesses, which are being challenged by a severe and sudden downturn. The bigger shocks, though, were the unexpected phone conversations with the bank – what to do with suppliers’ checks that had been presentedand cannot be met. And when I asked to see a spreadsheet looking ahead, blank looks were the order of the day. The truth is that in most cases, the decision maker had ignored cash flow planning.

There are solutions. The small biz can create a simple excel application that is updated daily when the CEO looks at his bank account online. (Hint. This may not be a pleasant task at first, but it is far worse than handling a call from the bank – as just mentioned.) And, of course, there are no shortage of software applications for more complex commercial operations.

The lesson of all this: Even if you have a mega successful company, if you ignore full and professional cash flow prediction modelling, you will eventually suffer to the same degree (in reverse) as your previous achievements.

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2 Comments on “Who needs to be concerned about cash flow?”


  1. […] Last week, I answered the question “who needs to be concerned about cash flows?”. […]

  2. Mountanous Maverick Says:

    nice site the text becomes a bit hard to read on your background after a while tho. jus a friendly suggestion =)


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