Failure to understand your cash position and current and future cash needs can ruin a business, even a profitable one.The sad truth is that cash-flow surprises kill many startups. Overall, 90 percent of small-business failures are caused by poor-cash flow, according to Dunn & Bradstreet. To prevent becoming part of the 90 percent, you’€™ll need to maintain a focus on cash. When it comes to the financial management of a growing company, always remember that cash is king.

“Cash is king.” 

Managing cash is one of the most important functions you must perform. But cash flow management is not waiting until there is a problem and then panicking by paying just the smallest bills and let the rest slide. Or stretching out all payments until vendors complain. Cash flow management is proactively taking actions that can improve your cash position.

Good cash-flow management means understanding every inflow and outflow of cash. In principle, you must delay every outlay of cash as long as possible, while incentivizing everyone who owes you money to pay it as rapidly as possible. Also, its about being vigilant about limiting any surprises such as unanticipated payment lags and unplanned-cash outlays. So how do you be proactive in managing cash? Managing it requires proactively taking steps to watch your dollars.