Cash Flow Management

Hey everybody, thank you for coming back to our podcast this week, where we take about fifteen minutes to help people steer their lives in the right direction. We try to bring up practical points you may not have considered, and we look at business, money, and Christianity from a unified perspective — in other words, everything we discuss in business and finance flows out of a faith-based worldview.

Today I want to dig into something absolutely critical for business success. The more areas we manage well, the greater our chances of building a stable, long-lasting operation. And today’s focus is cash flow management.

Cash flow is not the same thing as accounting, and it’s not the same thing as profit. Cash flow is simply the movement of money: what’s coming in and what’s going out — and whether you have enough liquidity to keep the lights on. A business can die of cash starvation long before it ever dies from lack of profit. You could be selling at a profit and still be in trouble if customers owe you money but aren’t paying. Without cash moving through the business, you can’t operate.

Let me read a verse from the Bible — Proverbs 27:23:

 “Be diligent to know the state of your flocks, and look well to your herds.”

What’s the point? Pay attention to the things that produce your income. You might look out the window and see large, healthy herds and think you’re wealthy — but if you haven’t bothered to inspect them and half of them are sick or dying, your entire financial foundation is unstable. That directly affects your cash flow. This isn’t about profitability on paper, and it isn’t about accounts receivable; it’s about the actual movement of money through your hands.

I once knew a woman who hated having unpaid bills. She’d get a utility bill from the mailbox, walk inside, write a check immediately, and then walk right back out to drop it in the mailbox — all within twenty minutes. The bill, however, wasn’t due for another three or four weeks. So why eliminate your own cash cushion? Why not keep that money working in your account until the due date? Paying instantly might feel responsible, but it destroys cash flow.

This is why understanding working capital and the cash conversion cycle is essential. In any business, we should forecast cash needs thirteen to fifty-two weeks ahead. Thirteen weeks covers a bit more than three months; fifty-two covers a full year. And you’re not just looking at the bank balance — you’re looking at what’s coming in, what’s going out, and the timing in between. I’ve watched plenty of people spend money simply because they saw it in the account, without considering what obligations were approaching. Inevitably, they end up short in the middle of the cycle.

So we need to ask: How do we get paid faster, and how do we pay out more slowly? That’s how you create a healthy buffer — an artificially higher balance inside the cash cycle.

There are practical ways to do this. How do your customers pay? Could you add a penalty for late payment or a small discount for early payment? Could you require a deposit at the beginning of a job to cover initial operating costs? On the other side, if something is due net-30, why rush to pay it in ten days just because the account currently looks good? That mindset — “I have the money right now, so I’ll pay it right now” — is the mindset of someone who doesn’t manage cash flow. You want that money available in case something unexpected comes up.

We also need to understand fixed costs versus variable costs, and be ready to cut quickly when necessary. What can you control? What is outside your control? All of this matters. If we keep three to six months of operating expenses in reserve, we create a safety net. This applies not only to businesses but to households. If your monthly expenses are five thousand dollars, a reserve of fifteen thousand helps you absorb surprises without panic. Profit doesn’t help much if you have no liquidity to survive the gaps.

People often focus only on profitability: “I bought this for three hundred and sold it for a thousand — I made a profit.” Sure, but if you can’t maintain operations, stress builds fast. Scripture tells us to know the condition of our finances — the flow of money — so that when something falls out of line, we’re ready.

Never confuse revenue with cash. Revenue is what you sold; cash is what you actually have. And never confuse one-time money with recurring money. Ideally, you want recurring cash flow.

For example, imagine selling washing machines. It’s typically a one-time purchase: maybe twelve hundred dollars. You buy it low, you sell it higher, and that’s it — now you need another customer. But what if you turned it into a recurring stream? Suppose you sold it with a down payment and a monthly service plan that includes maintenance and repairs. If you sold one hundred machines this way, and each brought in twenty-five dollars a month, you’ve created twenty-five hundred dollars of consistent monthly cash flow. Most machines won’t break every month, so you benefit from the float — just like insurance companies do. The question becomes: Can you create a float in your business that benefits both the client and you?

Many business owners simply follow the old pattern because that’s how it’s always been done. But we need to rethink everything in terms of cash flow. Cash keeps you alive. Even profitable businesses can fail if their cash flow is unstable. Maybe every unit you sell yields profit, but if you don’t sell enough units fast enough, you still can’t keep the doors open.

Understanding cash flow — and managing it — is essential to long-term success. When I was young and working in a convenience store, we had impulse items at the counter. The markup was high, but they sold constantly. These small, quick purchases kept money flowing. People came in for gas or cigarettes, but they’d grab a soda or a candy bar simply because it was there. How can we recreate that in our own businesses? What small, fast-turn items or services can increase cash flow?

Do we understand the state of the economy and how our business fits into it? Local economies shift. Patterns change. If we pay attention, we can adapt. If we cling to “how we’ve always done it,” we risk missing the very strategies that would keep our business moving.

So thank you again for joining us here on our podcast about business, money, and Christianity — a financial conversation grounded in faith. Like, subscribe, leave a comment. But above all, watch your cash flow. Keep reserves. Ensure money is moving. Keep enough on hand to face whatever a day brings.

Thank you again for being with us. I look forward to seeing you next week.