Biweekly Newsletter- Importance of Cash Flow Management
For any company that is new or in the process of growing in size, cash management is a very important aspect of the business. Cash management is classified by Inc.com, as a broad term that refers to the collection, concentration, and disbursement of cash.
Below are multiple articles related to the importance of cash management:
-For middle-market businesses, cash flow can be even more important than sales and profits, since if the company’s cash flow suffers, the sales and profits won’t matter and the business could fall into failure or bankruptcy. Cadence Bank explains seven ways to prevent this in their article, titled “7 Ways to Strengthen Cash Flow in a Middle-Market Company.”
-Richard Passov wrote an article for the Harvard Business Journal about cash flow titled, “How Much Cash Does Your Company Need?” His article provides a model for how companies should go about determining their optimal capital structure.
-In a great article by Rebecca Macdonald and Nathan Zhu, titled “The Importance of Cash Flow Management,” Macdonald and Zhu ask an important question to business owners, “How well do you know when and where your cash is coming from or going to?” One of the most interesting facts from this article was that only slightly over 50% of small businesses even have positive cash flows.
By Peyton Wille, CFO Consulting Partners