Profitability and cash are not the same but your business needs both to remain sustainable in the long term.  Cash is real and is the life blood of your business.  Run out of cash and you don’t have a business.

Lack of cash is what keeps many business owners awake at night.  A tool to better understand cashflow is the working capital cycle.   The working capital cycle is the relationship between cash, stock, accounts payable and accounts receivable.

You take cash out of the bank to buy stock, the cash is then unavailable until you sell the stock.  You sell some stock for cash and some on account. You hope that accounts receivable pay you so that you get cash back into the bank.  The working capital cycle is the amount of time it takes from using cash to purchase stock, securing a sale of the stock and then collecting the cash from the sale of stock.

To increase available cash the goal is to decrease the days your cash is tied up in stock and debtors.  Cash flow planning is important in any business and Enterprise Growth can help you implement strategies and tools.