The Cash Flow Blog

In an earlier post I mention time to cash several times and time to revenue others. The reason is because the two are related, but not the same.

Revenue is greatly based on accounting policy. When revenue can be recognized is a critical element of finance. Sales people enjoy it too as it’s generally when they’re paid a commission (booking commissions aside).

Revenue recognition policies are important to sales people and executives because of its tie to commission, quota, and financial reporting. Clearing all hurdles to revenue is something everyone in the sales organization should understand and work to accomplish as fast as possible.

Cash is…well cash. When you have money in hand and available to spend, you have cash. This can happen well after revenue has been recognized. You can’t pay bills, employees, rent, and utilities with revenue. It takes cash.

Yes, a line of credit can pay bills and some companies can factor receivables. But eventually you have to settle accounts. That’s the point of cash flow – timely money in, timely money out.

You should be tracking both.