“We have to make a decision. We only have enough cash to either pay our employees or our suppliers next week, but not both.” The old saying was true: Cash is King!
Wow! This was what my Controller just told me. We had just acquired another company. The decision was made to operate it at arm’s length from the parent company. And this meant that we had to fund the operation with our own cash, which was at a dangerously low level.
Neither option that the Controller just mentioned was palatable. We needed a strategy to tackle the immediate cash shortfall and to then create a strong cash position moving forward.
We had the Call to Action! This would prove to be my first real lesson in Cash Management which could not have been made more intense and immediate!