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Vitalis Holdings Positive Cash Flow

How to make positive cash flow a part of your company strategy

Generating a positive cash flow is a necessity for each business and it can easily be planned. By making it a part of your business’ strategy, you will be able to plan for the times where your cash flow will be at a minimum. Here are our tips to make a positive cash flow a part of your business’ strategy.

1. Company Culture

It might sound strange that your company’s culture can influence your cash flow, but it is probably the most important part. A company that does not have a cash flow mindset as part of its culture, starts with a negative culture.

Now the question you ask might be – “how can a positive cash flow be a part of the culture of a company?”.

Every company builds its culture by deciding which values are important to the success of the company. It also uses these values to attract the right-fit employees, those that will fit in with what the company wishes to achieve. Why not choose future employees based on their ability to understand and drive the cash flow of the company?

Now you might think yes, yes, we have all heard that profit is the most important driver for our company.

I do not agree with this view. The view that profit is the most important part is wrong. Profit is not the most important, cash flow is. A company like Pick and Pay operates on a 3% net profit margin, but they can operate a bank and allow you to make withdrawals at the tills because they focus on running a positive cash flow every single day.

| “Revenue is vanity, profit is sanity, but cash is king.” – Unknown

A company which focuses its employees on positive cash flow can help the employees to focus on saving costs wherever possible, selling goods or services with value add instead of just pushing the numbers, getting great clients who actually want to pay their accounts at the end of the month, negotiating the best possible terms of trade and payment with suppliers and will motivate each other to push the company to achieve its goals.

2. Business model

The moment you decide to start a company or grow your company, the first question you need answered is – “Can the company make enough cash from this idea?”.

There are thousands of businesses with brilliant products or services but cannot make enough cash to survive. This can happen from a myriad of reasons which we can discuss on another day.

When you build your idea for your start-up or work on your company’ growth plan, you need to ensure that the financial model of the company shows exactly how the company can generate a positive cash flow.

Most companies start up with bootstrap financing or borrowings from financial institutions and these need to be replaced and repaid respectively.

| “If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cash flow.” – Jack Welch

It is thus pertinently clear that your business must plan for a positive cash flow from the get-go otherwise it plans to generate no cash flow.

3. OKR’s

OKR’s is a concept which is growing in adoption across the business world. It developed at Intel during its rising years and was adopted by Google when they started off.

The acronym stands for Objectives and Key Results. It’s a system which requires to be built and reviewed every quarter of the year to ensure that the company remains on target to achieve its goals.

I believe that a positive cash flow needs to be built into your company’s objectives for the top management to ensure that it filters down to the rest of the business. Without cash, a business cannot build, grow or even pay its normal expenses to ensure that its doors remain open.

I do not believe that in business there are some concepts which can be assumed or which are tacitly implied. All business concepts are to remain in sight and in our minds when we grow and build a business. A positive cash flow is one of them.

If more businesses had a positive cash flow on top of its mind, then less businesses would have closed down.

| “There is really only one way to address cash flow crunches, and it’s planning so you can prevent them in advance.” – Elaine Pofeldt

4. Review your progress

Watch your cash flow like a hawk. Daily. Michael Dell from Dell Computers says it perfectly:

| “We were always focused on our profit and loss statement. But cash flow was not a regularly discussed topic. It was as if we were driving along, watching only the speedometer, when in fact we were running out of gas.” – Michael Dell

The cash flow of a business is just like the gas in the tank. The more gas there is, the further you can go. The more you check and measure it, the sooner you will know when it will be depleted. It is thus extremely important to check and measure your cash flow as often as possible and make it a part of your monthly review of the business and its strategy.

5. Communication

It is an unfortunate reality that too many businesses do not communicate the current state of the business to its employees. This can be from a general lack of communication to deliberate withholding of information.

The most important thing to do in order to align all the stakeholders in your business is to communicate the current state of the business to all.

It is important to communicate to your employees which months you expect to deplete the available funds so that they can help you push to get through it. Similarly, you need to communicate with them about the great months and reward them for their efforts to ensure that you build an inclusive company culture.

So let us go and plan for a positive cash flow. If we do not plan for it, how can we expect do actually generate a positive cash flow?


  1. ThomasJanuary 26, 2019

    Awesome article Tiaan!

    1. Tiaan GeelJanuary 26, 2019

      Many thanks Tommy. Glad you enjoyed it.


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