Here is an article that I wrote that was published in the latest issue of the WHFA Retailer.
We’ve all heard the saying “Cash is King”. That is very true. The level of liquidity that an organization can maintain determines the ability of that organization to operate each day and to succeed in the future. High liquidity allows organizations to reinvest in themselves to boost efficiency and sales. This reinvestment is the catalyst for expansion which generates even greater cash flow. On the flip side, low liquidity forces companies into cut- backs, tightening of operations and an eventual downward spiral.
Recently some business leaders asked me for advice on figuring cash flow with respect to actual versus money in the bank. They also wanted some specifics on using software and spreadsheets to assist in getting a better handle on their cash flow. With this in mind, I recommend four prime actions:
• Reconcile the bank account
• Generate a Statement of Cash Flow
• Forecast future cash levels
• Track key cash and liquidity metrics
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