Understand when cash moves

Revenue, profit, and available cash describe different parts of the business. A customer can agree to pay after you have paid for delivery. Growth can enlarge that gap. A busy company can therefore face a cash shortage even while sales increase.

Cash flow means money entering and leaving the business. Know when major receipts and payments should occur. Compare those dates with the amount currently available. Do not wait until an obligation becomes urgent to discover the gap.

Collect promptly under the agreed terms. Negotiate supplier terms that both sides understand and can accept. Keep employee commitments and other binding obligations. Avoid financing everyone else’s operations through early payments and late collections.