Blood of the Business

The most basic need for any creature in this world is the ability to feed itself so that it can survive, and Business is no different than that! Yes you’ve guess right! I am talking about Cash and Cash flows!

Whoever has been in business, corporate world, Agriculture or even a farmer , they all are dealing with cash flows at different levels and every one of them have been striving to enhance cash flows ! Some would be striving for sufficiency in cash for survival, some would be aiming for excellence in cash!! When I was doing MBA, I learnt many strategies for cash flow management. But as I stepped into the corporate world and with every passing year of experience, I came to believe that we should not only manage cash, but we should strive for cash excellence.

Cash excellence – Best practices for prudent cash and Liquidity management.

1.????? Cash Focused culture: one rupee earned in hard cash is one rupee spent in hard cash. This culture we see in small businesses but same gets lost as business grows and there is pool of cash available for spending. Slowly the cash consciousness diminishes, and it starts getting reflected in diminishing cash reserve. In my view companies need to reinforce at all levels and in every employee’s DNA that cash needs to be generated efficiently, and it is not the business of Business development or operations or finance, it’s the responsibility every employee who is working in the organization. Every person has to show support in end-to-end cash management which involves thousands of daily decisions made by individual employees at all levels -from CFO & CEO in overseeing the entire company to Business development in bringing orders, SCM in procuring material to accounts payable specialist in making payments.

2.????? Forecasting and Budgeting: With cash focus culture, there is need to strengthen three parameters – people, system and processes. Once these are aligned, forecasting and budgeting would automatically give higher accuracy and provide more transparency to the ultimate stakeholders.

3.????? Streamlining: With the above step, flaws and slack period is identified. Next comes the role of aligning receivables and payables so that the Boat is not overloaded and left for sinking. This is the trickiest part and would need every iota of precision and willingness to collect every penny due to the company and at the same time managing creditors with the same ethos and responsibility.

4.????? Analysis and Feedback: As it is said everything is a loop and we should always complete the circle with feedback; same is true with cash flows too. Once people, systems and processes are laid down and the cash culture is set we should continuously stalk the efficiency of this culture by feedback and analysis.

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Cash is blood not only for survival but also keeping the business healthy. In today's world organizations have to be competitive and also strengthen their position. Building cash culture is not only the demand but a Need of the hour.