managing cash and thriving in business

As our forefathers say the cash is king and for every business to be successful the business owners should be clever in managing the cash as good as managing to generate good profits. When there is a negative correlation between profits and cash flow, this is a clear sign of the business is not performing as it could be. this could be due to following many factors:

1. The customers with whom we engage our business are not business viable
2. the market in which we operate is not supported with enough cash flow
3. the working capital management of the company is not efficient enough to correspond with the profitability of the business.
4. unnecessary investment on non-current assets when there is no such emergent needs to the business
5. the finance providers are very harsh on the collection of their dues (mainly the non-current liabilities) such as bank loans and finance lease and so on
6. in efficient credit policy engaged by the management in order to boost the business
7. fraudulent revenue recognition to keep the shareholders happy at the time of financial reporting year end
8. a wrong selection of gearing policy for the company

When reviewing the business process of any struggling businesses as a business consultant a detail scanning should be carried out to their finances and ascertain the causes of such difficulties.

the objective is to ensure the business flourish with strong cash flow while making greater profits. this is the right and best combination of any successful businesses. careful review of the business matrix should be performed by the consultant in order to arrive to conclusion how good the business is thriving for greater success in both short and long run.

the business matrix will have the following elements

1. greater profits with strong cash flow
2. greater profits with a weak and or negative cash flow
3. suffering losses with strong cash flow
4. suffering losses with a weak and or negative cash flow

once we have the results from the above matrix, then we should place the organization in to any one of the above 4 segments of the business matrix.

Accordingly, recommendations can be put forward to improve the business conditions to thrive better in the future.

For any further analysis please contact me on 50008194