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The Cash Cycle

Cash management is the one discipline all business owners must master, especially owners of early stage businesses. The battle between growth and liquidity is constant and requires a constant eye on the cash cycle an important measure in determining how fast company can turn an order in to cash. The working capital balances for accounts payable, accounts receivable, and inventory must be monitored against a rolling order forecast spanning at least one quarter. A cash forecast must be developed to provide the owner with the knowledge and time to prioritize the use of cash. Downside protection can be buttressed by a revolving line of credit with a local commercial bank. These loans can provide a business with much needed cash to support cash demands.

If you need some help with your cash cycle, please visit my website, www.reflectiveadvice.com or give me a call.


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