by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Cash Velocity Summary There are two cash velocity rules: ● Make sure that the amount and rate of cash flowing in is enough to cover all your business and personal needs ● Be paranoid. Unfortunately, stuff happens. And unless you’re willing to risk losing your passion,...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Now let’s look at the impact on what we discussed yesterday had on our throughput. Let’s say we immediately visit a customer whose complete order was shipped and had just been received by that customer. We make, and they accept, our 20% Discount Mafia Offer and we...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Reducing Float for the Cash Constrained Company Now let’s consider a case where there is a cash constraint. When cash is your constraint, going out of business is usually not far behind. Most small businesses go out of business because they have run into cash...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
The Role of Payment Terms in Cash Velocity To reduce the time it takes to collect payment from our customers we offer a 1%/10 option, but none of our customers use this option and many of them pay late which is why we have an average of 42 days. So we remain at 55...
by Dr Lisa | Theory of Constraints Finance, Accounting, and Cash Flow
Cash velocity is a component of the wider topic of cash flow. Both cash flow and cash velocity are like good health. When you have it, you don’t really notice. But for many companies the time between when they have to pay their vendor and when they get paid is large...
