Cash Management or your company will go to pieces: THINK CASH!


Posted on : 11-06-2009 | By : dutdot | In : Business, Financial Freedom, Startups

I got preoccupied with downloading of e-books from KnowFree (how I love freebies, particularly, when it comes to harnessing my mind!).  Good thing my baby’s a sleepyhead today. I should be sleeping, too, but goodness, I couldn’t take my hands off from the keyboard. I downloaded a lot of e-books today. I still have a lot of e-books pending to be read. Haha.

I browsed the Cash Management (making your business cash-rich without breaking the bank) book by Tony Dalton, and I got really hooked. I decided then to continue reading about it. This is just a preliminary review of the book. I am not making a thorough review yet of this book since I am just in the first few pages, but, one thing that struck me is that it’s not enough that a company is making profits. The question is, how positive is its cashflow? How is it being managed?

Tony Dalton says it well as follows:

If you manage the flow of money and the creation of cash, profits will follow. Remember: a profitable company can go bust while one with a positive cash flow won’t.

“THINK CASH”…a management practice, not a management theory

Think Cash revolves around:

  • getting your money in quicker
  • making better use of that money when you get it
  • not paying it out too quickly

Oftentimes, companies would wonder where the money is, or, why they aren’t earning money yet when in fact, there is money within the company just waiting to be tapped. Mr. Dalton said that “…the ‘think cash’ principle releases this money so that you can use it effectively to build your company”, and this is done through maximizing every penny that runs through the company.

An illustration was made by Mr. Dalton as follows:

  • cash flow = money that moves through the company
  • cash comes from sales then goes out to pay expenses
  • + cashflow = >more money coming in and <money going out
  • – cashflow = <money coming in and >money going out
  • (If there’s a negative cashflow, borrowing is not dangerous. The real deal is to turn it into positive cashflow.)

WOW. The more that I think about cash flow, the more that I am hooked to finish reading the book. I’m already in the chapter wherein it discusses about getting the money! This is a big help for my promising startup, and yes, in managing the finances of my own household.

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