I was on a call recently and the focus was cash, my favorite topic! We were talking about how much is the right amount to have on hand, looking forward at investments in the business, etc. Then, one person said: cash is either focused on in businesses that are in dire straights or high performing businesses. It was a great comment! Companies tend to focus on how much cash is on hand when they are about to run out and manage receipts and disbursements closely. On the other end of the spectrum for a very different reason, cash is managed daily to maximize the cash flow in the business.
I’ve favored the daily cash flow report. If distributed to key managers and key personnel, people become engaged in increasing how much cash is generated in the business. Conversations arise about significant expenditures and how much inventory is needed. I’ve seen people in different parts of the business work more closely together because they understand the interconnections in the business. At the end of the day, everything turns into cash. Where do you fall on the cash management spectrum?