Consider two cases:
1. You have to pay someone $1000 today and your bank balance is $500. You will receive $5000 in a week from a client.
2. You have to pay someone $1000 today and your bank balance is $2000. You will receive $2000 in a week from a client.
Which one would you pick?
If you pick Option 1, because your bank balance will be $5500 at the end of the next week, you are falling in the Revenue trap. You will have a great balance sheet, but your business will not be sustainable.
If you pick Option 2, even though you will only have $3000 at the end of the next week, you will build a business which will sustain itself in the longer run.
Paying people on time is very important to gain goodwill. If those people are your vendors, they’ll appreciate your punctuality and continue doing business with you for long. If they are your employees, they will continue working with you longer. If it is the government, they won’t fine you.
Optimise your business and your life for Optimum Cash Flow, not Revenue. Having money when you need it is more important than having money later while delaying cash outflow now.
Show me the money NOW,