Revenue is growing. But is your cash flow getting healthier? A business can be having its best sa...Revenue is growing. But is your cash flow getting healthier? A business can be having its best sa...
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Revenue is growing. But is your cash flow getting healthier?
A business can be having its best sales month ever and still feel financially stressed.
Why?
Because revenue isn't cash flow.
As a business grows, a few things can happen at the same time:
→ More invoices are issued, but customers take longer to pay. → More suppliers mean more bills sitting in Accounts Payable. → More transactions make bookkeeping harder to keep clean. → More employees and tools increase operating costs. → More sales can create a bigger working capital gap.
That's why I think Accounts Receivable and cash conversion deserve as much attention as revenue growth.
A few numbers I like to keep an eye on:
1. Accounts Receivable Aging How much cash is still sitting with customers?
2. Days Sales Outstanding (DSO) Are customers taking longer to pay as the business scales?
3. Accounts Payable Are upcoming obligations putting pressure on cash?
4. Bank Reconciliation Can management actually trust the cash balance they're looking at?
5. Operating Cash Flow Is the business actually generating cash from its operations?
Growth should ideally create more financial capacity, not just more transactions.
Sometimes the most valuable finance work isn't finding another way to increase revenue.
It's making sure the money you've already earned actually makes its way into the business.
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