An Outside idea: Mind your cash

I was talking to a business owner the other day and he told me how he’d had the best month of sales in years. He said that he was over the moon until he logged into his bank account and realised what all the increased sales meant.

He was skint…

It all looked good on paper and in theory. He’d had bumper month after bumper month but his cash flow had deteriorated to the point where he was seriously concerned about how he could pay his bills.

This guy hadn’t been keeping an eye on the numbers and had continued to let long-standing customers pay late and on terms that might have been acceptable in the past, but that should have been revisited as the business grew.

The cash flow gap was just too wide.

Your cash flow gap is the period between when you pay for stock, services or other costs associated with making a sale – and the date when you get paid for that sale.

If you don’t pay attention to your cash flow, you won’t stay in business. You’ll have problems paying your suppliers and you’ll find yourself digging into your personal savings or borrowing just to stay afloat.

My question for you this week is:

  • Do you know what your cash gap is?

Onwards and Upwards my friend.

About the author

My clients build brilliant businesses and spend more time with their families.

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