Business owners, managers, shareholders and many others have become enamored with sales and revenue increases, reported profits, earnings per share, price-earnings ratios, stock market price, cost reductions and related concepts that focus on the market capitalization of the business and its related stock price per share. Such sales and revenue increases calculated on accrual-based accounting principles may be out of sync with real sales to quality customers, collected in a timely fashion that ensures real profit to the business. While these yardsticks may be significant and even elegant score keeping measures for determining how well the enterprise is doing in the stock market, they have minimal significance for the business without cash -- unable to meet payroll, pay vendors or, horror of horrors, make requisite tax payments.

Profit is an intermittent measure -- calculated monthly, quarterly and annually. But cash is a daily concern. The eager search of the daily mail for incoming checks is not just greed or lust, it is often a survival issue. In Managing Cash Flow: An Operational Focus (Dec. 2002), Rob Reider and Peter Heyler return to the bedrock foundation of business, eschewing paper profits and nebulous valuation numbers to concentrate on the vital functions that actually produce cash and allow organizations to survive, stay afloat, and grow.

This book concentrates on cash management, the essential element of any business enterprise. The purpose of the materials is to help readers understand how to manage, plan and analyze cash flow for their organizations. General focus is on helping the reader understand:

• Cash flow and management techniques necessary for the business to function economically, efficiently, and effectively.
• How to recognize and manage effectively the principal factors affecting cash receipts and cash disbursements in the organization
• The impact of operations -- organizational planning, sales, operating costs, non-value-added activities -- on the cash flow of the company.
• The effective principles of investing excess cash and borrowing to cover cash shortfalls.
• Effective planning techniques and procedures for managing the cash flow of the organization.
• Techniques and measures to analyze the cash flow of the organization.

Profit can be thought of as a figment of the accountant's imagination, especially since there is so much room for legitimate interpretation, judgment and flexibility in determining exactly the organization's net income for the period. Cash, however, is cash. It is precisely measurable, tangible and absolute. Having enough cash allows the business manager to concentrate on other more enjoyable aspects of the business -- growth, development, new customers, new products, new processes, and so on. Not having sufficient cash forces the business to fixate on getting more cash any way possible, sometimes to the exclusion of effective management and proper growth and development. Cash management is an indispensable element in the success and continuity of the business. Each situation is unique, but cash management concerns are the same for every business.

The authors look at cash management with an operational focus that considers the above principles in an effort to maintain the company in the most economical, efficient, and effective manner possible. With these factors in mind, operations can be analyzed to identify areas for improvement in which best practices can be implemented that maximize cash inflow and minimize cash outflow.
 
The primary focus of ongoing cash management and continual operational analysis is on the manner in which cash is used by the organization, considering the sources and uses of cash and the policies and procedures used to deal with over and under cash conditions. But, there are other operational areas that need to be addressed as well, because of their direct impact on cash flow: sales; customer order backlog; accounts receivable; inventory; property, plant, and equipment; employment; and management and administration. The authors identify these common business functions as businesses not to be in because they too often become ends in themselves and distract from the essential cash-flow function. The book imparts vital techniques for keeping these functions streamlined and focused on the ultimate goal.
 
The authors' bottom line is good old-fashioned money. CFOs, controllers, treasurers, cash managers, operations managers, and all those responsible for a budget will find Managing Cash Flow: An Operational Focus to be a valuable resource. The book offers a host of procedures and techniques for applying a cash-flow criteria to all business functions, keeping companies focused on the real bottom line.