Are You Managing Cash Or Is Cash Managing You?

Cash is king - we have all heard it before. But the question is, are you the "king of kings" that rules your cash flow? Or are you at the mercy of your bank balance? There is only one way to find out. You need to put your cash flow under a microscope and ask yourself these 3 simple questions:

✅ Is my operating cash flow consistently positive?
✅ Is my operating cash flow topping profits?
✅ Is my operating cash flow growing quicker than profits?

If you answered no to one, some, or all of the questions above, something isn’t going quite right. Your timing is off. Or well, your cash conversion cycle - the time between spending money on crafting your stuff and getting the cash from selling it.

That can be caused by 3 things - you are overstocking on inventory, paying suppliers too quickly, or customers are paying too slow. All of them keep your cash tied up, so you can't put it to good use! To figure out where it's going wrong, you need to compare your operating cash flow to profits and look for negative differences in your:

💸 Revenue - shows troubles with accounts receivable
💰 Cost of goods sold - shows troubles with inventory
🧾 Other expenses - shows troubles with other payables

Once you have that, you can start designing a strategy to speed up your cash conversion cycle. If successful, your cash flow can be consistently positive and give you proper financial freedom. On that note: Ready, set, go, let the cash flow! 🤑