Stop focusing on sums ...

04th December 2008
By focusing on the top line (turnover or sales) and the bottom line (profit) many businesses could be sleepwalking to their collapse in these turbulent times. They run the real danger of falling into the liquidity trap if they spend their time concentrating on their Profit and Loss Accounts.

Businesses now more than ever before need to understand their Balance Sheets and their Calculator.jpgWorking Capital. At the end of the day a Profit and Loss Account is just a load of sums, and it can be manipulated to give a number of different answers. But cash is real and it is really what could kill you if you don’t understand it and manage it. To do that you need to absolutely understand your Balance Sheet and make it work for you.

If you don’t understand your Balance Sheet, then you are in good company. Most business leaders don’t. That ignorance is no longer an option, get to grips with it and make it work for you. Hidden in there is the key to unlock your cash flow.

Yes, of course you still need to protect and build your sales, manage your margins and control your costs. But the first thing you should consider is the cash impact in doing that, and actually in everything you do.

So, stop focusing on the sums, focus on the reality. The real cash in you bank account!

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