Everything in any business venture ultimately revolves around one thing, money or cash. The running of any successful venture depends on the liquidity of a company. Cash flow can be used to assess and calculate various parameters in a business. These parameters provide essential information about the company’s financial status. First, it can determine the rate of returns from any given project. Additionally it determines the liquidity of the enterprise since sometimes liquidity may not directly link to profits. Most business ventures fail because of cash flow problems although the business idea is excellent with lots of prospective clients in the pipeline. As the saying goes:
“CASH IS KING”
The primary cause of liquidity issues in any company is mismanagement and poor decisions. Have key indicators to identify and resolve cash flow issues before they hurt the business. Therefore, it is necessary, during the establishment of any business venture for companies to look at methods that can be used to avoid cash flow issues.