The CFO'S Perspective

When business disruptions occur, it can be expensive. Most business owners and CEOs have a model for success in mind, but what about the other side of the coin? Failing to prepare or put contingencies in place for unexpected events can turn a potential blip into a catastrophe.

Increasingly, business owners and leaders are leaning more on their financial teams to help prepare the company for uncertainty. Specifically, the business's CFO is taking on a broader role that includes making sure that your firm will be able to weather unexpected events.

Running out of cash is not only a sign of poor planning, but it's also one of the biggest reasons that businesses fail. Forecasting your company's cash flow can be tricky because of the many variables that determine how much cash you will need for operations versus the amount available.

The adage says, “cash is King,” and this could not ring any truer for small and mid-sized businesses. Cash is a crucial component of any successful business, especially startups and new ventures.

Cash flow is the lifeblood of organizational success.

Positive cash flow leads to profitability and provides the funds needed to reinvest in the future of the business. However, proper cash flow management is difficult for many companies to undertake successfully.

Some businesses fail to analyze cash flow projections appropriately to identify potential shortcomings, while others suffer from mismanagement of payment terms and an inability to collect outstanding payments. New businesses are prone to spend recklessly and make poor inventory choices because they lack the awareness needed to make cash flow-centric decisions. Companies struggling with cash flow management often err on several of these key elements, fueling the vicious cycle of cash flow issues.

Business executives who have problems with cash flow at their organizations (or want to avoid future issues) will benefit from earmarking these cash flow tips: