It is often said that cash flow is the life blood, the oil that lubricates all parts of a business. Our take on it is that it is actually better likened to water in a human body. Cash Flow constitutes more than 75% of your business and it catalyses most transactions within your business and with all your stakeholders. Ensuring a well functioning business often equates to ensuring a well management cash resource. Changes in your assets, liabilities and equity are all different types of cash movements in and out of your business. In fact nowadays most transactions happen through some exchange of value or cash from one party to another. Here are a couple of factors we look at when considering a Cash Flow Management Plan for your business. All pertain to the nature and character of the cash generated:
- The quality of the cash – certain cash items such as assets have different characteristics within their own group and also differences when compared with other types of assets.