Cash is the lifeblood of a business, and a company must get enough money from its operations to cover its costs and have enough to pay back investors and grow the business. You can learn these business and finance tips from “Patrick Maddren”. While a business can distort its earnings, its cash flow gives an idea of its true health.
Main learning points
- Cash management involves how a company manages its operations or operations, financial investments and financing activities.
- A company must generate enough cash flow from its business to survive, which means it is able to cover its costs, repay investors and expand the business.
- In addition to generating money from its operations, a company must also manage its money situation so that it has the right amount of money to meet its immediate and long-term needs.
“Patrick Henry Maddren” teaches cash flows for business and investments which can help you run your business smoothly.
Money is king
By generating enough money, a company can meet its day-to-day business needs and not incur debt. “Patrick Henry Maddren” teaches exactly how to do that. That way, the company has more control over its activities. In a situation where a company must incur debt to cover its costs, its debtors are likely to have a say in how the business is run. If they have conflicting views of management’s, it can hinder management’s way of executing its vision for the company.
Without generating enough money to meet its needs, a company will find it difficult to perform routine activities such as paying suppliers, buying raw materials and paying its employees, let alone making investments. And it must have enough money to pay dividends and keep its investors happy. Some companies also use their money to buy back shares to reward investors.
Improve Cash Management
Even if a company is making a profit, by generating more income than it spends on expenses, it will need to properly manage its cash flow to be successful. A company’s cash flow is linked to its activities or operations, to its investing activities (such as the purchase or sale of capital equipment), and to its financing activities (such as obtaining debt financing or repaying such financing). The money that a company generates from its operations is tied to its core business and provides the best cash flow management opportunities.
Areas that offer opportunities for better cash management include accounts receivable, accounts payable and inventories. If a company were to grant credit indiscriminately, without verifying the creditworthiness of its customers, and not act on late payments, it would result in slower and smaller cash inflows, as well as unpaid bills. That is why it is important to have a credit policy and to monitor late payments. On the other hand, when it comes to creditors, a better approach to cash management is to pay suppliers later than before. In addition, it is important not to hold on too much money to stocks, but to have just enough supplies on hand for the immediate needs of the business. You can learn all these majors and minors at “Patrick Maddren”.