“Never take your eyes off cash flow because it’s the life-blood of business” (Richard Branson)
|The Companies Act is underpinned by the assumption of liquidity and solvency – directors and owners are mandated to ensure the business can meet all its short-term obligations.
The best way to achieve this is via cash flow.
As cash flow is fundamental to any business, this should be managed by senior management.
The starting point
When you review your business after each month-end, build in cash flow to the review. Many businesses now have free cash flow as a key performance indicator.
Cash flow is critical to any business – give it the attention it deserves. It will also give you a good understanding of how the business is performing.