Measuring your Cash Flow Lifeblood

Summary

Cash Flow is the lifeblood of any business

If the speed you collect cash owing to you is slower than the rate you pay it out to your suppliers, you are going to find it increasingly difficult to find the money to pay your suppliers.  Unless this is rectified, you stand a good chance of going bust.

Positive cash flow also gives you money to fund your business's growth from your own operations without borrowing.  Knowing your cash flow allows you to plan affordable growth.

This article introduces Net Cash Flow and Marginal Cash Flow / Current Ratio concepts for measuring Cash Flow health.  Periodically measuring your Cash Flow situation can make you aware of any looming problems in time to rectify them.

Degree of Difficulty: not difficult to understand but you may not implement it too much until you are at Blue Belt (intermediate) level.

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