The Importance of Cash Flow

Jul 15, 2021

Cash flow is vitally important to the success of any business and is often the most misunderstood aspect of business reporting. Cash flow is not limited to the detailed schedule of your company’s incoming and outgoing cash you see annually; it needs to be your ongoing indicator of business success. Monitoring cash flow effectively will allow the business to thrive regardless of the current economic environment.

Cash flow refers to the net amount of cash that a business is currently generating. In other words, it is the difference between cash incoming and outgoing. It is also sometimes referred to as the cash that is moving or “flowing” within a business. As one of our Consulting Partners, Jonny Baker, describes it, “Cash flow is the… arbiter of what the enterprise is actually creating in value”.

Cash flow is of particular importance to an organization because it reflects the reality of your situation and your success or lack thereof. It is a key indicator to  the value of a firm based. Being able to accurately time and place your cash flows is necessary to be able to prepare for the liquidity needed in a particular situation, whether it is for strategic purposes or for survival.

To enhance a business owners understanding of cash flow management and its importance, see what our consulting partner, Jonny Baker has to say about it. He takes you through the importance of cash flow, tips on how to calculate it and find ways to ensure the success of your organization through cash flow management.

 

Questions or Want to Talk?

Call us directly at 972.221.2500 (Flower Mound) or 940.591.9300 (Denton),
or complete the form below and we’ll contact you to discuss your specific situation.

Part 13: Long-Term Blueprint

The following is part 13 of a multi-part series on The KHA Way, KHA Management Consulting’s Integrated Service Offering. This blog series includes the benefits of using KHA Management Consulting Services and the components included. Previously, we introduced KHA’s...

Part 12: Corporate Strategy Introduction

By: Brian Ragan, Senior Strategic Management Consulting Services The following is part 12 of a multi-part series on The KHA Way, KHA Management Consulting’s Integrated Service Offering. This blog series includes the benefits of using KHA Management Consulting Services...

Part 11: High-Level Benchmarking

By: Jonny Baker, Partner, Strategic Management Consulting Services The following is part 11 of a multi-part series on The KHA Way, KHA Management Consulting’s Integrated Service Offering. This blog series includes the benefits of using KHA Management Consulting...

Part 10: Job Descriptions and Employee Handbook

By: Jonny Baker, Partner, Strategic Management Consulting Services The following is part 10 of a multi-part series on The KHA Way, KHA Management Consulting’s Integrated Service Offering. This blog series includes the benefits of using KHA Management Consulting...

Part 9: Lines of Authority and Organization Wide Metrics

By: Jonny Baker, Partner, Strategic Management Consulting Services The following is part nine of a multi-part series on The KHA Way, KHA Management Consulting’s Integrated Service Offering. This blog series includes the benefits of using KHA Management Consulting...

Part 8: Organizational Chart and Leadership Team

By: Jonny Baker, Partner, Strategic Management Consulting Services The following is part eight of a multi-part series on The KHA Way, KHA Management Consulting’s Integrated Service Offering. This blog series includes the benefits of using KHA Management Consulting...

Insights on the Paycheck Protection Program and Loan Forgiveness Tips

The Paycheck Protection Program offered small businesses a rare opportunity: access to SBA-backed loans that can be fully forgiven—if you meet certain criteria. Now that lenders are opening up for forgiveness applications, it’s time to start collecting the documents...

Part 7: Financial and Scenario Modeling

By: Brian Ragan, Senior Strategic Management Consulting Services The following is part seven of a multi-part series on The KHA Way, KHA Management Consulting’s Integrated Service Offering. This blog series includes the benefits of using KHA Management Consulting...