By Walter Nunes & Yhordan Serpentini
Cash flow is the intake and outtake of cash in your business. For small business owners, cash flow is your lifeline. Your business can not operate without positive cash flow in order to pay for inventory, payroll, expenses, and other operating necessities. For this reason, it is important for you to understand your business Cash Conversion Cycle.
The Cash Conversion Cycle is the time it takes for your outflow of cash to inflow back into your business. That timeframe varies from industry type, and it can be the same day to as long as weeks or months. Take a look at the chart below:
During the cash-out phase, how vulnerable is your business? Do you have access to liquidity? How long is your Cash Conversion Cycle? Can you shorten it? When was the last time you had a cash flow analysis?
Here at Jaeli Capital Consulting, we can help you address your business cash flow and establish a plan to make it more efficient.
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