Cash Flow

One of my clients recently asked me for copies of the small business finance self-study courses that I wrote more than 25 years ago for Indiana University.  I found one of the old sets.  Here is a short extract from the first chapter:

“Managing cash flow in a small business requires nothing more than projecting and subsequently analyzing cash received and cash spent.  It is critical to keep track of all cash activity as a means to prepare future projections.  Short-term solvency can only be maintained through a good cash flow tracking system. Long term solvency is only possible if net cash flow from operations, excluding borrowings or money invested by the owners, exceeds loan payments.  The owner must survive short term to reach the long term.”  The courses then included study examples and homework.

Pretty simple stuff.  What was true 25 years ago remains true today.  I wrote those courses before desk tops and before lap top computers, before cell phones, before faxes, and before Microsoft Excel spreadsheets.  The point is that the management tools have changed, but the concepts remain the same.  To survive and prosper businesses must track, monitor, project and manage cash flow.   Most owners need experienced help with these tasks.

One of my roles with clients is to provide assistance with cash flow issues.  Cash flow can be improved from higher sales, higher margins, lower costs, better capital structures, and working capital management.  But first, cash flow must be monitored, then projected, and then managed.

I serve mid-market companies (sales $2 million to $50 million) as a part time CFO to assist in these areas, and appreciate any client referrals or referrals to other service providers (bankers, lawyers, agents, accountants, business associates).

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