CASH IS THE ULTIMATE MEASURE IN BUSINESS. Acquisitions, expansions, buyouts and bankruptcies all revolve around and depend on measures
and flows of cash. Too little cash can kill a business; too much can invite unwanted takeovers. Every significant decision in a business has definite
cash impacts and implications, but ironically, there is no generally accepted

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Chapter 7 looks at ways of controlling operating expense, that is, selling, general and administrative, or SG&A. The focus is on both expense and expenditure, which are considered from two key perspectives, cost control and capacity planning. Chapters 8, 9 and 10 look in turn at accounts receivable from customers, the inventory we hold for [...]

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Let’s look now at an overview of the book to see how it can help you develop that most basic of business survival and success skills, cashflowability.
PART ONE: THE ABCS OF CASH FLOW. Following this introductory chapter, we discuss the language and concepts behind cash-flow thinking, including a preliminary sketch of each of the cash [...]

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Many small- and medium-size organizations think they cannot afford a trained and experienced chief financial officer. In fact, they cannot afford not to have that kind of expertise. But even among those companies that do have skilled CFOs, there is no guarantee that the cash-flow way of thinking will get integrated into the organization. The [...]

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Imagine a basketball team composed of outstanding players at every position. For some strange reason, though, the players all suffer from the same defect—a poor understanding of the basic rules of the game. The players may be great at dribbling, passing, shooting and rebounding, but if they don’t know that they have to inbound [...]

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The funny thing is that whenever it comes time to calculate the total value of a company, the flow of cash will be much more critical than the flow of value that conventional accrualaccounting systems track. Whether your firm is small or large, public or private is not at issue. In every case, the underlyingvalue [...]

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Bankers usually understand cash flow better than anyone else. The reason is simple. Bankers are unique in that after they sell you their product—money—they want you to give it back! Loans are made in cash, and lenders insist on being repaid in cash. A good lender, therefore, must understand what it takes for a business’s [...]

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One basic principle in accounting requires the recording of revenue when the economic activity that generates it is substantially completed. In most cases this happens when the product is shipped or the service rendered. If there is a significant time lag between substantial completion and actual payment, then waiting for actual payment before recording the [...]

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Some of the heaviest fog in the business world settles around the phrase “cash flow”. The term is seldom used with precision, and it’s even more rarely discussed in a practical, systematic way. I’ve encountered cash flow as the topic of a specific college or MBA-level course only once, and then it was just a [...]

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You might think that most of these observations apply to smaller companies that live close to the edge—the kinds of companies for whom survival is a crucial issue, if not the main event. While there is some degree of validity to thatview, the real question has to do not with company size but with basic [...]

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