Cashflow is still the King — Manage it well

This is a general guide to post-pandemic business management.Cash is not the king. Cash is trash. It loses 5 to 10% of its purchasing power every year. Cashflow is the king. It’s all about how that cash flows in and out of the business. Why should cash flow out? Because it is very hard to make money without spending some money. Cash should flow in because you are running a business to make as much money as possible.How cash flows in and out of the business is a process that needs to be managed. Failing to manage cash flow can easily lead to the death of the business. There is nothing new here. What was prevailing before the pandemic continues after the pandemic. Given that so many businesses make missteps and mistakes in managing cashflows, there is a need to emphasize the importance of managing the cashflows well.In my years of consulting, I have observed that even though cash flow management techniques are detailed in many books and articles, very few business managers purposefully set out to manage cash flow. Oftentimes cash flow management is done as a firefighting exercise, only invoked when the company is already experiencing cash flow challenges. Another observation is that when managing the cash flow, most managers make use of a few working capital management techniques.The most prevalent techniques deployed are 1) aggressively chasing debtors and 2) defiantly delaying supplier payments. Both of these typically result in disruption of business as both customers and suppliers get agitated and the relationship turns sour, invoking the need to be mended later when cash flows have stabilized.Build a buffer — it’s not wise for a company to live from paycheck to paycheck.Minimize the use of Overdraft Facilities (a.k.a Payday loans).Only purchase assets using equity capital, debt, or free…