An illuminating exploration of the importance of your company's cash position and the steps you can take to ensure organizational liquidity

In Cash is King, working capital and cash strategist Peter W. Kingma delivers an insightful and practical discussion of why your company's cash position should be on an equal footing with sales, cost, and service, and how to make that happen. You'll learn why cash is the fuel in your corporate engine and discover the attributes of an organizational cash culture and how to adopt them within your own firm.

While explaining some of the most important―and most misunderstood―corporate finance concepts, this book is not a finance textbook. Instead, it uses case study examples to offer concrete suggestions for improvements in your company that increase the availability of cash when you most need it. You'll also find:

• Discussions of the importance of sufficient liquidity for operational concerns, research and development, and capital improvements
• Explorations of the consequences of insufficient cash positions
• Examinations of the ripple effects of seemingly small decisions that affect cash supply

An essential resource for managers, executives, and business leaders everywhere, Cash is King is an effective and hands-on exploration of cash as the lifeblood of any modern commercial entity and an incisive guide to ensuring that your company will have enough of it when its required.

Table of Contents

Chapter 1 Order-to-Cash

Chapter 2 Procure-to-Pay

Chapter 3 Forecast to Fulfill

Chapter 4 Logistics

Chapter 5 Production

Chapter 6 Controller

Chapter 7 Metrics

Chapter 8 Resiliency

Chapter 9 Cash Leadership Office (CLO)

Chapter 10 Nonmanufacturing Examples

Review

A comprehensive overview of all aspects of finance and cash management in business.

Kingma, a financial expert, acknowledges the long shadow cast by the Covid-19 pandemic, which not only shut down many of the world's economies but also highlighted how elongated and interconnected the global supply chain has become. Kingma acknowledges that businesses deal with many complicated factors, like supply-chain issues, product design and advertising, market competition, interest rates, and so on, but from his experience and research, he derives a very simple truth: "It takes cash to address market shocks." This simple truth has a vast and complicated network of realities underpinning it, and the author explores this by means of an ongoing fictional device: an electrical equipment company called Owens Electrical, run by a man named Bob. Owens does mostly business-to-business commerce, and since Bob rose through the company’s ranks to become its CEO, his perspective gives Kingma the perfect vehicle to explain the intricacies of cash management in a successful company that does all of that managing in-house. The author goes over every aspect of order-to-cash (OTC) mechanics: gaining customers, taking their orders, invoicing and billing them, and receiving their cash in the bank. Along the way, Kingma dispenses a great deal of technical advice on all levels of finance, usually revolving around Days Sales Outstanding (DSO), or the number of days on average required to collect money from a particular customer.

The author's experience is obvious on every page. His ability to get to the heart of the many complicated subjects he raises is exemplary, as is his skill at dissecting those subjects in ways that will be immediately accessible to non-specialists (up to a point, anyway; the book clearly targets those in the business/finance world). Document, document, document, he advises: "Be very clear in how you manage credit and risk so that any deviation can be seen and approved in the proper chain of command." He reminds readers who may be overly inclined to delegate and compartmentalize responsibilities that, much like those over-stressed supply chains, everything is connected. Kingma is an invaluable guide to his subject, but the biggest and most pleasing surprise of his book is the fact that he's also a decent writer of fiction. His hypothetical company of Owens Electrical convincingly grows and becomes more complicated as it faces each new issue he wants to illustrate. Sometimes, his characters sound like business seminar transcripts instead of people: "We had to challenge our assumptions regarding talent and whom we needed in key roles," says one android to another. "We modified our metrics and incentives and transformed operations reviews." But most of the time, readers will find themselves at least as involved with the narrative as with the concepts. They'll cheer on Makayla, a surgeon raised by an immigrant mother in rural Missouri; they'll appreciate the fact that visionary Caesar likes to have new hires around him, to guard against the complacent thinking of the old guard; and they'll be just as surprised as Annette's co-workers when the steely, no-nonsense woman unexpectedly cracks a joke. Readers will come for the financial know-how, but some of them may very well stay in order to root for a company that isn't even real.

A thoroughly informative―and surprisingly gripping―manual for clear-eyed money management.

―KIRKUS REVIEWS

From the Inside Flap

No business can survive without sufficient cash on hand. Despite this, many companies subordinate the importance of liquidity to operational, accounting, or other interests that result in cash shortfalls exactly when that cash is needed the most. This can have profound, sometimes existential, consequences.

In Cash Is King, working capital and cash strategist Peter W. Kingma delivers an incisive, hands-on discussion of how to put your company’s cash position on an equal footing with sales, cost, and service, and why you need to make that happen now. You’ll learn why cash is the fuel in your firm's engine and discover the attributes of an organizational cash culture, as well as how to adopt those principles within your own organization.

The book explains some of the most critical and commonly misunderstood corporate finance concepts, diving deep into illuminating case studies and examples without drowning the reader in mathematics or accounting concepts. It demonstrates concrete strategies you can apply immediately in your own company to increase the availability of cash when you need it the most.

A transformative resource for executives, managers, and business leaders everywhere, Cash Is King is the effective and practical exploration of the lifeblood of contemporary commercial organizations that you've been waiting for. It's an insightful guide to ensuring your company has the cash it needs when it's required.

An easy-to-follow playbook for one of the most important yet often overlooked business requirements―managing cash and working capital

Cash Is King is not a dry corporate finance textbook. It is an easy-to-read account of strategies leaders must take to improve the generation and preservation of cash from operations. Cash enables research and development, funds capital investments, and ensures businesses are agile and resilient―yet far too often, the concepts of properly managing cash and working capital are overlooked.

"Peter Kingma's engaging book brings to light that an understanding of corporate cash flow cycles is as foundational as understanding profit and loss statements. Sales and earnings meet their complementary match, completing the business model and determining investor returns and financial strength. This is the definitive book on corporate cash cycles and working capital management that will help leaders build more resilient, more valuable organizations.

This book should be mandatory reading for anyone aspiring to corporate leadership, especially within a working capital-intensive company."

―CHRISTOPHER VOLK, former President, CEO, Chairman of STORE Capital, and author of The Value Equation

"Peter Kingma offers a strong framework to create a 'cash culture' that will help leaders execute their strategies and tactical activities, and thus ensure that their businesses maintain liquidity, build capital, and prepare for success."

―PATRICK ESPOSITO, bestselling author of The Structure of Success, President of ACME General Corp., and Founder/CEO of Initiative Labs LLC

"I recommend Peter Kingma's insightful book to anyone who not only wants a roadmap to the new cash flow normal, but more broadly, who seeks to navigate this new road to become a better business manager, leader, and investor. His three decades of firsthand experience and unparalleled wisdom can be taken to the bank."

―JOAN T.A. GABEL, Chancellor, University of Pittsburgh

About the Author

PETER W. KINGMA has over thirty years' experience advising some of the largest and most recognizable corporations in the world on their financial positions. He is an expert in helping firms increase cash on hand from operations and the effective use of capital. He is a strategy and transactions principal at EY Parthenon, leading the working capital practice in the Americas.