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Cash Flow is King

Companies go bankrupt because of a lack of cash to meet ­critical ­obligations, not because of a lack of profits. You can run the most ­profitable firm in the market and still go out of business because you ­cannot pay salaries or rent! You have invoiced enough revenues to probably buy a brand new house, but your client will only pay you a few months from today.

This revenue is meaningless if your bank account is empty and you cannot pay your bills.

Why do very profitable companies still encounter enormous cash-flow challenges? These are some of the downfalls of a poorly managed sales team that is operating in a wrong sales mindset:

  1. INVOICES vs PAID INVOICES. Salespeople are paid on total revenues generated, not on revenues that have been paid in full from the client.
  2. IT’S NOT MY JOB. Salespeople are not responsible for collecting the money. There is someone else inside the firm who is tasked with the job of “begging” for payments.
  3. BIGGER IS BETTER THAN FASTER. Salespeople prefer to close ­bigger deals (regardless of the payment plan) since they are not going to be paid any extra commissions for fast payments!
Last modified on Monday, 29 June 2015 13:24
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Your expensive office does not pay for your salaries, you do. Prioritise your costs! #farhanqureshi #paysalariesfirst http://t.co/7wrUVn4uyb
Work hard all the time to make your clients happy! #farhanqureshi #workinghard #crossingthets http://t.co/hPdUetnFzK
Without systems and structures you will not be able to sell your business one day #farhanqureshi #sellingyourbusiness http://t.co/ILY59HqLsc
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