Cash is king - CPA | The Credit Protection Association

18/4/2017. By James Salmon,

Cash is King.

I took a small group of ramblers – a group of around thirty people – out for a hike over the North Downs over the Bank Holiday weekend. Getting out of the city and enjoying the beautiful English countryside is a great way to recharge the batteries after a busy week. At the end of our walk, we arrived in a quintessential sleepy little English village and descended upon the local pub. The place was dead when we arrived and the dozing barman was delighted to get some custom. There was a sign on the bar that said “Sorry – no cards – cash only” but we opened up our wallets and within minutes of us arriving, extra staff appeared from nowhere. Locals started turning up. The way the pub sprung to life reminded me of a little apocryphal story.

It is a slow day in a little village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich tourist is driving through the village, stops at the local hotel and lays a £50 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the £50 note and runs next door to pay his debt to the butcher. The butcher takes the £50 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the £50 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers’ Co-op takes the £50 note and runs to pay his drinks bill at the pub. The publican slips the money along to the local bookmaker drinking at the bar, who has also been facing hard times and has had to offer him bets on credit. The bookmaker then rushes to the hotel and pays off his room bill to the hotel owner with the £50 note. The hotel proprietor then places the £50 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the £50 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism.

It just goes to show the power of cash flow. You can make sales and fill orders but it is money that makes the world go round. The Credit Protection Association will get you paid. You will then be able to pay your workers, pay your suppliers and get the wheels of commerce churning.

And no – my bar bill wasn’t £50.