Cash flow is a very important factor to run organization successfully. After all we do business for the cash and it should be maintained every time. It occurs many times that when organizations have good cash flow, they just don’t think about the worst time and do not required expenses.
Every time is not same for everyone. Always there is a rise and decreases in demand exist, as an organization one need to think about it carefully. If you think of progress in a short period, you must require enough cash on hand for daily activity. Most start-up organizations take risk based on the potential client and prepare a long term plan. But every time things do not go as we estimate. We can’t predict natural disaster’s effect on the market, and things get worse if there is no enough cash on worst time.I am not saying to be pessimistic but my point is that too much optimistic create worst situation.
Whenever you have a good cash flow, just shelf some of them for the future and don\’t put all cash in the plans. Once cash struck in the project, even time come when you don’t have enough cash for the day to day activity, like your rent, interest to pay etc. All of your administrative work affects due to this cash flow crisis.
To prevent an organization from such cash flow crisis, we should consider following points.
- Do not rely on any one customer or client.
- Do not put all cash in one project.
- Do some backup plan particular in cash flow.
There are so many examples of organization, which were collapsed due to cash flow, though they had very good work, good project, good employee, and good management.
We don’t give much attention to cash flow when we have a good flow of it. If it is neglected, it harms to organization for some months and sometime it just destroy the whole organization.
Every time please keep eyes on the cash flow. :)