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Sunday, November 15, 2009

Cash is King!

Cash flow is the life blood of business. During this recessionary period we have seen companies announce daily the need for federal assistance and court protection. The income statements have traditionally been the focus of executive reviews with the balance sheet reviewed as compliance to policy. The management of the balance sheet is essential to success in both growth and recessionary times of an organization.

The team that is well equipped with balance sheet disciplines strives ahead of the competition during recessionary periods. A recent example of this is the U.S Auto industry. Growing up in Michigan the fortunes of the automobile seem to have no end. The economy prospered, business and personal incomes soared. The past few years have been truly a tragic and predictable event. The cars that were produced lost in the branding game and consumers drifted toward foreign reliable cars. The truck lines were the saving grace as they projected the “big” American image.

The bright spot -- Ford Motor Company avoided bankruptcy and announced this month third quarter profits with positive cash flow. I commend Ford and credit them for the aggressive stance and focus on the fundamentals. Do what is right! Take care of your business and treat it as your own.

Brett Vanderwater, MBA, CIA, CMA, CTP

Read More by Don Miller on this topic.