Wednesday, May 02, 2007
Cash Flow - Is it Strategic?
Cash flow is both very strategic and very un-strategic. What I mean by this is, cash flow is the thing that kills most companies that go out of business. I've seen otherwise profitable companies driven to insolvency by poor cash flow management. So staying on top of your cash flow is definitely a strategic priority. But cash flow is also very, very tactical. It has very little to do with the reasons why most companies succeed, and often, cash flow goes down when a company makes good strategic moves. Watching cash flow has rarely led to good strategy - and in fact, companies that are too obsessed with cash flow may be driving away otherwise very profitable customers. So, watch your cash flow, yes - because it affects your survivability. But if the ship isn't sinking, remember to stay focused on moving forward.