Cash and Profits Are Not Interchangeable

The Merriam-Webster dictionary defines profit as “a valuable return” which would imply there is actually something being received at some point in the process.  However, the reality is that you cannot actually “spend” profits. You must have sufficient cash available to fund the company’s operations until conversion occurs.  Since there is nothing tangible returned by profit alone, the logical conclusion is that without cash conversion there is no REAL profit: CASH IS THE LIFEBLOOD OF EVERY ORGANIZATION. Generating it is the most important aspect of profit management and conversion of profit into cash in the shortest possible time frame should be a goal of every organization.