Managing the King: Cash
February 9, 2009
“Cash is King” as the old saying goes.
In business cash serves several purposes. It meets cash obligations, can be retained for unexpected issues, and is invested for future needs of the business.
The timing of cash inflows and cash outflows is critical for the success of a business. The first step to tame cash is to understand the operating cycle.
The operating cycle (or cash cycle) is the flow of cash through a business. The first activity is cash infusion. This infusion comes from loans from creditors, investments from owners, and cash received from the sale of goods or products.
The second activity is the production of goods and/or services.