“Cash is king.”
Think about all the times you’ve heard this phrase. What does it mean to you? Why does “cash” deserve such royal standing? Cash is the lifeblood of every company. Nothing causes more business failures than a lack of cash management and cash flow. You cannot pay your bills with receivables and inventory.
It is necessary for business owners to have a cash management plan in place. Some business owners may never create a plan because they think it’s too difficult or believe there isn’t enough time. Or, others may think that a profit and loss statement is a cash management plan. It’s not. That doesn’t determine if you can afford payroll or pay your bills.
Your plan doesn’t need to be complicated. You just need a plan. Period. It can be as simple as an Excel spreadsheet outlining money coming in and going out over a designated period.