Business success will be hard to come by without keeping track of your numbers. Your P&L and balance sheet are important, but cash flow projection is the way to look ahead and forecast your cash needs.
EXPERT TIP | Gary Furr, Organizational Development Consultant:
Many companies (small, medium, and even large companies) have gone out of business due to the lack of adequate cash flow. Revenue minus expense is profit, but it is not necessarily cash. Cash is the lifeblood of every business. Without cash, you do not have a business.
Too often, business owners look at net income or profit and think they are making money. Your profit is simply the amount that your revenue exceeds your expenses; it is not cash but the theory of cash since your P&L does not take into account debt service.
An important note about cash flow is that accounts receivable is not cash. Many businesses have gone bankrupt with plenty of accounts receivables on their books, but no cash to operate on. As you know, without cash, you cannot pay your bills. If you want to better understand your metrics and grow your business, you will find guidance in Chapter 10 of my book.
With over 40 years of C-level business experience and an MBA in organizational development, I am uniquely qualified to help you achieve success in your business. Give me a call to set up a free consultation: 503-312-3145.
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