‘Turnover is vanity, profit is sanity, but cash is reality’
I’m guessing that you’ve heard this phrase before – but what does it mean in the real world:
Well, I’ve seen too many businesses spending their time chasing low-margin orders, giving larger discounts, extending terms – all in the misguided belief that such activities would save their business.
And any accountant can make your profits look good. Just don’t look too closely as they wave their magic over ’accruals and prepayments’ etc. – all in the misguided belief that a profit, however small, means you’re succeeding.
But the sale isn’t done until the customer pays, and you can’t hide losses on the balance sheet forever. The cash runs out, the salesman and the accountant get their bonuses, but the bank gets the house.
I’ve seen situations like this all too often. I have dragged businesses back from the abyss. The secret – as always – is in the cash.
All this can be avoided with a bit of Cash Flow Kung Fu.
If you want to know more then click here to read on…
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