It is indeed the cash flow that allows the company to commit to investment expenses, R&D, and more pragmatically to face general expenses (salaries, taxes, etc.).
Cash flow is the company's fuel. If there is not enough cash, it will be difficult to negotiate financing with banks, to raise capital from partners, to obtain enough stock to fill orders... Eventually, facing bankruptcy or and a eventual non-payment?
What is the sense of "cash culture"?
It consists in putting cash back at the center of attention in order to improve it and ensure the good health of the company.The main objective is to make all the players aware of the challenges of cash management so that they understand their role in optimizing cash management. Designed as a cross-functional approach, it must involve all the company's employees, from managers to sales and purchasing.
Developed a long time ago in Anglo-Saxon countries, it has moved away from the simple notion of profit to become a concrete indicator of a company's financial performance.
A l'origine, la culture du cash était une pratique venue des pays anglo-saxons, plus précisément de Royaumes-Uni.
Initially, the "cash culture" was a practice that came from Anglo-Saxon countries, more specifically from the UK. In France in particular, after the economic crisis of 2009, many companies found themselves in financial difficulty and cash levels have dropped. Certain aspects of accounting are sometimes neglected, such as cash flow and working capital requirements (WCR).
Finance departments in charge of treasury then realized that they had to become business partners, sharing information from financial information systems, building cash flow forecasts from data collected on the ground.
They had to start integrating a new dimension, by becoming close to the operational staff to drive and coordinate actions and ensure that beyond their results, this cash reserve was sufficient to support growth and guarantee the financial solidity of their company. .
Therefore, the challenge for the finance department is to change habits, to spread a set of good practices, to implement them and to optimize them so that they are considered at all levels of the company: everyone can play a role in bringing in cash flow.
When and why develop a "cash culture"?
We all know the saying: ""prevention is better than cure".Building a cash culture in a company is a long-term process and a fundamental step. Above all, the cash culture is a response to the desire to eliminate any risk of failure and to identify any mistakes.
By putting cash at the center of decisions and processes, companies give themselves every chance of ensuring security and financial solidity. This approach must therefore be part of the company's culture.