Cash Rules

learn & manage the 7 cash-flow
drivers for your company’s success

by

bill mcguinness

CASH FLOW IS THE RODNEY DANGERFIELD OF BUSINESS MANAGEMENT. It never gets the respect it deserves—that is, until a business runs into trouble paying its bills. Cash is like the air that we breath: It’s taken for granted, but desperately missed when cut off. And like that other precious commodity, water, we tend to overuse it when it’s plentiful, regretting our profligacy only when the flow slows to a trickle. The study of cash-flow management doesn’t get its due these days for one simple reason: The U.S. economy has been awfully good for an awfully long time. In most major business sectors, sales have been growing strongly. Credit—both shortterm operating lines and long-term debt—is readily available. And best of all, investors have been only too eager to throw venture equity at every half-baked idea that comes down the pike. When business is booming like this, it’s no wonder that a lot of managers and stockholders have become rather blasé about cash flow. Boom times breed sloppy habits, such as overstaffing
and overspending on everything from marketing to administrative overhead. And, consistent with the old adage that you never spend someone else’s money as carefully as you spend your own, this overspending is especially flagrant at start-up firms that are running entirely on outside capital.

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