Cash Hemorrhaging

Financial Disease #1

It is common for financial professionals to group like type financial activities into categories in order to discretely assess and evaluate performance.  Each of these activities is an important element in effectively running your business.  Many times these individual elements can get out of alignment with the current needs of the business.

A fresh way to look at these elements is to use analogies for communicating both problems and solutions. Coupling these financial activities with common medical diseases is one way to enhance the non-financial readers’ understanding of financial related business problems.

For example the medical definition of Hemorrhage is: a small or large loss of blood in a short period, either externally or internally.  If a person bleeds too much and the flow of blood cannot be stopped – they will die.

Whereas, the life blood of business is Cash.  Cash flows into and out of the business.  Cash keeps the business running.  Blood keeps our body running.  When a business becomes short of cash, like a person who is short of blood, the business will die.

Below is a summary explanation of Cash Hemorrhaging that can attack the well-being of any business’s financial system.

Cash Hemorrhage is a costly disease that causes cash to unnecessarily flow out the business.  Cash hemorrhage can be internal, where inventories, receivables, budgets and accounts payable are not properly managed.  It also can be external, associated with poor contracting, planning, suboptimum lending arrangements and failure to negotiate supplier terms.  Cash hemorrhaging impacts your profitability and growth potential.  During difficult economic cycles this failure to stem cash hemorrhaging could lead to sever cash shortages resulting in business failure.

Cash Hemorrhaging is just one of seven deadly financial diseases.  Over the next few months I will share six other financial diseases.  The B2B CFO® Discovery AnalysisTMmay just surprise you with both what we find and what our recommended treatment is.  Besides being a Financial Blacksmith, I am also an Organizational Coach.  Please visit my web site or give me a call to assess the overall financial health of your business.  Allow me the opportunity to work with you, so that together we can take your business to a higher level of success.

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