The ability to effectively manage cash is the single most important skill and concern of the entrepreneurial CEO, including managed service providers.
You can take all of the brilliant strategy, sales skills, people skills, and product innovation and toss them all out the window if you can’t effectively manage cash.
One of the beauties of the managed services business model is that is makes cash flow management much easier than the break-fix business model due to the recurring revenue. However, if you want to run a fast growth business, or to ensure your survival even in tough times, just relying on the recurring revenue isn’t enough; you need to take advantage of other strategies to ensure that you actually collect that revenue in a timely fashion.
While cash flow is different than profitability, I think it deserves to be in this section of the site. You can have all of the bottom-line profits in the world on your accounting statements, but it won’t matter if you can’t survive your cash flow situation.
At the time I am writing this introduction, our economy is starting to recover from what was previously a terrible state. I read the results of a survey of CEOs across the country from every industry and size of company, and cash management was the #1 concern of over 90% of those CEOs. Previously very successful and very profitable companies are in danger of disappearing almost overnight because their sources of cash have dried up. Their business models may still be perfectly sound, but their cash flow has dried to a trickle.
Don’t let that happen to your business.
Dig your well before you are thirsty.
Put the practices that we recommend in this section into place before you need them. Don’t wait until you’re in a bad spot; that’s the hardest time to collect cash.
MRC
