CHAPTER 6
Managing Your Cash Flow
More Is Better
So now you know how to read your Cash Flow Statement and use it to build a cash flow budget. Hopefully you’re convinced that conserving cash is vital to keeping your business alive, and that you need to closely manage the outflow of cash so every expense is serving to keep the business running rather than draining it of precious lifeblood.
The heart of cash flow management is the cash cycle. In most businesses, the cash cycle is based on terms of payment (which indicate the date full payment is due as well as under what conditions discounts can be taken) rather than a simple cash sale, and looks like this:
1. A sale is made.
2. The goods are shipped or the services are rendered.
3. As soon ...
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