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Cash Flow and DSO

Originally Published: October 2013

“You can be profitable and still be bankrupt. You must closely plan and monitor your cash flow to be successful and stay in business.”

Tim Berry, author,
president and founder
Palo Alto Software

Cash is King, or at least it should be, for all businesses - no matter the size. Still, many companies focus on profit, rather than on working capital (cash). Profit is important, but positive cash flow is what keeps the company going. By now, we should have all learned that lesson. A lack of working capital was the primary “cause of death” for many U.S. dot-coms in the early 2000s. The same issue was also the reason for many of the bankruptcies filed during the recent financial crisis. Therefore, the primary focus of any business should be positive cash flow management.

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