Cash Flow Follies
Top 10 Cash “Leakers” in Reverse Order
10) Buying too many supplies/subscriptions/entertainment/travel/etc
9) Purchasing in volume in return for discounts (cash v. cost)
8) Making the wrong lease v. buy decisions
7) Having too high fixed costs
6) Not knowing the product line contribution margin-creates bad decisions
5) Making discretionary expenses rather than planned
4) Pricing the product / service incorrectly
3) Maintaining too much inventory
2) Not collecting from customers / extending the wrong credit terms
1) Paying Vendors too quickly / using the wrong credit terms
While cash flow is vital in and of itself, it will always be influenced by the effectiveness of your company’s processes.
