The importance of cash flow
A business that appears successful can fail because of poor cash flow. And, even if poor cash flow doesn’t put your business at risk, it might hurt your potential to grow.
For example, you might run a small business that makes toys. A large retail chain wants to place an order for 5,000 toys. You will make a lot of money, but the retail chain won’t pay you for the order until 90 days after you deliver the toys.
You know that you’ll need to buy the parts for the toys, pay your employees to assemble the toys and pay to ship the toys to the retailer. The entire process could take 30 days.