Although we may not always use hard cash those words are still as true as when Liza Minnelli sang them in Cabaret. It's said that more companies go out of business from lack of ready cash than from lack of sales, although without the sales the business isn't going to go anywhere anyway.
It's ok being asset rich but if you cannot convert this to ready cash when required then you have a problem. Looking at it simply if you think about buying stock on thirty days payment then selling - at a profit - but also on thirty days payment. When it comes to paying the supplier it looks as if you have done well but you have not yet received any payment so have no money to pay the supplier. Your supplier stops your credit and you can't get any more supplies, your purchaser eventually pays but is not coming back to you as you couldn't guarantee their next order. End result you go out of business.
This is why a cash flow forecast is important to any business and is simple to create. Start off with your projected sales, list your fixed and variable overheads, deduct one from the other. Link this with the cash in your bank and bring the balance forward to the next month. The varied costs will change and the sales will probably not come in exactly to the date payment is expected but if you allow for this then you will be prepared for anything that happens.
Keeping track as to whether your actual figures vary to your forecasted is important. Allow for seasonal adjustments. This will always be an on-going project but it is one of the most important tasks necessary to stay in business.
If you have any questions on this please contact me on firstname.lastname@example.org
Adding value to your business. Based in Reading, Berkshire.