Why Cash is King?
By Pramod Dhalwani 08 February, 2023
“Revenue is vanity, profit is sanity, but cash is king.”
What is Cash Flow?
The money coming (flowing) in and the money going (flowing) out of the business is known as cash flow.
What is a Cash Flow problem?
When the amount of cash flowing outside the business exceeds the amount of cash flowing into the business, there is a cash flow problem.
Most common phrases and questions said by entrepreneurs facing cash flow issues:
- How do I pay my suppliers on time?
- How do I pay salaries on time?
- I wonder how other businesses manage to grow through struggling times
- The accounts show I am making profits, then why don’t I have cash?
- I wonder if I am the only one facing issues with cash
Many entrepreneurs face these dilemmas on a daily basis. According to the Australian Bureau of Statistics, 60% of businesses stop operations in the first 3 years of running. A report released by the Australian Securities and Investment Commission suggested that 40% of businesses fail because of insufficient cash inflows.
Cash flow plays a vital and massive role in the success of a business. It is very important to manage it correctly and have it in order.
Managing cash flow effectively is more of a business necessity rather than a want. Business operations can come to a halt with poorly managed cash inflows and outflows. On the contrary, well managed cash flows can lead to success
