How is Your Cash Flow? Step 3

Step Three: Be Consistent.

All too frequently companies set up procedures and systems that go unfollowed. This happens for a number of reasons such as the system is too cumbersome or takes too much time. An unused system, or one that is used inconsistently, will invalidate your work as well as make it much more difficult, if not impossible to achieve great results.

Inconsistency leads to other issues too, such as your ability to pay employees and vendors in a timely fashion. It can also affect the business’ ability to deliver products and services to clientele. These types of situations could negatively impact your credibility with your clients, employees and vendors as well as damage your business credit.

It is far better to block-off the time regularly in the calendar to correct deficiencies in the system as well as to implement the system to its greatest level of effectiveness. If uncertain on how to develop or implement such a system you can consult the internet, books on business cash management or utilize a qualified business coach.

Note:  There is a significant difference between cash management and cash flow.

Positive Cash flow is having more than enough to pay everything that’s due and some extra.  Negative Cash Flow is when you have less than what you need or you are left with less net than the last period. 

Cash comes in from sales, lines of credit, even credit cards, as well as investments and the sale of assets. Cash goes out to pay for operating and direct expenses including, but not limited to payroll, taxes, interest and cost of goods, in addition to principal debt service, and the purchase of assets.  

CASH IN is all you have available.  CASH OUT is all you need to pay in the period.  It is the TIMELY flow in order to pay the bills on a TIMELY basis.

Cash management is the method by which a business can best plan for any lag between the time it has to pay its suppliers and employees and the time it collects from its customers.

It is important to not confuse one with the other, because knowledgeable cash management will improve your cash flow with good decisions!