It's almost impossible to overstate the importance of cash flow to a healthy business.

"We use the projections to make decisions on what equipment we're going to buy, what our labor needs will be, what our costs will be like," Farley says. "We build out the model so we can work with our bank and determine what months we anticipate our inventory buying will be highest. We like to practice just-in-time inventory management to the greatest extent possible."

While there are many ways companies can improve their cash flow (some of which are unique to the type of business or industry they are in), most fall into one of three general categories: accelerating cash inflow, delaying cash outflow and reducing cash outflow by minimizing expenses.

"Companies can maximize their cash flow by improving their receivables terms, working to get extended payables terms from vendors and being as restrictive as possible when it comes to spending on capital items," Grace says. "They can subsidize working capital with short-term borrowings, but they have to have cash flow sufficient to amortize or pay back the debt."

A big stumbling block that keeps many companies, especially smaller ones, from being able to maximize their cash flow is lack of appropriate financial recordkeeping, Grace says. "We advise all our clients to get a good accountant to set their books up so they have access to interim financial information throughout the year, not just at tax time," he explains.

The key to maximizing cash flow in the retail automobile business is simple, according to one Michigan entrepreneur who owns multiple car dealerships: "Collect receivables as fast as you can."

One of the biggest factors dictating cash flow in that business is the status of contracts in transit (CITs). "Every sale of a new vehicle that is done with any type of financing-whether it's from the manufacturer, a bank, a credit union or a specialty lender-involves a CIT," he says.