‘Cash is King’, is an old saying which describes the importance of cash in running a business. It basically means that cash flow is at the heart of a business and is a vital element for success of any business.
Good cash flow management entails ensuring that you have more incoming cash than outgoing. Positive cash flow arises when the cash coming into your business from capital, sales and other revenue sources is more than the cash going out through expenses, salaries, etc. Negative cash flow arises when cash outflow is greater than cash received. This generally is a problem for the business that management must grapple with. It is evidenced by:
- Late or non-payment of suppliers, salaries, taxes and other essential business related expenditure.
- Inability to fulfill customer demands in a timely manner.
- Threatened or real legal action by suppliers at the extreme.
- High stress levels across the business.
Read More Let us first of all deal with the common causes of negative cash flow:
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