When Sandy Kronenberg lands a new customer, the celebration lasts only a few seconds. Then, the arduous task of conducting credit checks, establishing terms, and structuring the deal begins.

“It is important to make sure that the terms are conducive to operating the business effectively and profitability, says the chairman and president of Netarx Inc., a communications reseller and integrator in Farmington Hills, Mich., with approximately 50 employees and $15 million in revenues for 2006.

For Kronenberg, the deal always spins a tight orbit around cash flow. Unless he has clearly defined the payment schedules, services rendered, and internal workings of the deal, profit margins can unravel and a cash crunch can ensue. “It is important to confront cash flow issues up front in order to avoid problems down the line,” he explains. “It’s necessary to structure deals on a caseby- case basis and understand how the situation will play out on the balance sheet.”

These days, Kronenberg isn’t the only executive capitalizing on cash flow. “It is almost impossible to operate a business well without managing cash flow effectively,” says Chris Winter, a principal at 4-Profit LLC, a Riverdale, N.Y.-based consulting firm. “Cash flow drives decision making and plays a huge role in determining the success of a company. It’s especially critical at smaller firms that experience significant fluctuations in business and receivables.”

To be sure, SMB VARs and professional services firms must confront thorny cash flow issues daily. Most quickly discover that it’s paramount to monitor revenues and expenses to ensure that there’s cash on hand for equipment, materials, supplies, and payroll.

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