Any senior manager or executive who has endured the anxiety and sleepless nights of being responsible for an organisation which has faced the risk of running out of cash needs not be told of the importance of having a perennially healthy cash balance.
Those businesses which find themselves running low on cash start by delaying payments to non-essential (or undemanding) suppliers. As things worsen, payments to essential suppliers are delayed and relationships put to the test.
Threats of legal action may follow and the situation worsens when payroll can’t be made on time. Employees start to get concerned at this point and a trickle of departures may turn into a flood.
At this point it’s only a matter of time before the firm collapses in on itself and is brought to its knees by creditors.
The case studies on cash-flow discuss the key areas that need to be addressed to avoid this type of scenario to ensure that cash becomes a strategic enabler – something which is available to invest in and build the business – and to build up resilience to external shocks.