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Become Financially Intelligent or become a Slave.



One of my consulting clients recently asked me, "What is the leading cause of business failure or organisational collapse? 

Research by many prestigious institutions like Dunn & Bradstreet show that the leading cause of organisational failure is bad cashflow management.

Even hard work, sincerity, passion, talent, technology, great products, good markets etc. cannot save an organisation which has poor cashflow management.




Sales is Vanity,
Profit is Sanity,
Cashflow is Vitality.
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What is cashflow?
Simply explained it is the amount of cash that actually flows in and out through the accounts of a business. It represents the liquidity of funds within a business and in a sense the fuel that allows the business to keep running.


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Tiny or very large, more than 85% of all enterprises that fail globally, do so because they were unable to manage cashflows effectively.






As a consequence  of neglecting cashflows or starting with too little money, many honest, sincere, talented, hardworking people with good products and services become bankrupt. Lenders lose money, but owners lose everything, including their sanity. Many land up facing harrowing litigation, and also endure social disgrace.

Research shows that more than 70% of all businesses have no idea about the actual details of their financial situation other than their bank balance. Accounting may be boring, but failure to plan and implement your finances can be fatal. 

It is Unfortunate that in our education system we teach people thousands of topics but rarely do we not teach the vital life skill of 'Financial Intelligence'.  That is the ability to understand fundamentals of money, cashflow, banking, taxes, insurance, savings, investing etc.

You may ask, "Why do I need to know about cashflow?"
Everyone needs to know about cashflow, because, the same issues effect that affect organisations also affect individuals in their everyday life.

Individuals or organisations, the inability to understand and respect the natural laws of finance and commerce inevitably leads to indebtedness and financial slavery from which escape is next to impossible.

Comments

  1. I enjoyed reading your article :) PLease continue publishing helpful topics like this. Regards, from alwaysopencommerce.com.

    I think this article will fully complement your article.

    ReplyDelete

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