What is a Cash Flow Quadrant?

Published by Thomas Herold in Accounting, Investments

'Cash Flow Quadrant' is explained in detail and with examples in the Accounting edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

The cash flow quadrant is a diagram that shows four types of individuals involved in a business. These four people make up the entire business world. The four quadrants are E, S, B, and I.

The E quadrant stands for employees. Employees have the same core values in general. This is security. When any employee sits down with a manager or a president, they will always tell them the same thing. This is that they are looking for a secure and safe job that includes benefits.

The S in the cash flow quadrant represents a small business owner or a self employed person. They are generally solo actors or one person outfits. These types would rather operate on their own, as their motto is always to have something done right, you should do it yourself.

On the right side of the cash flow quadrant are the B’s. B stands for Big Business people. Big businesses have five hundred or greater numbers of employees. They are completely different from the others in the quadrants, as they are constantly looking for the most intelligent and capable people, networks, and systems to aid them in running their large business. They do not want to micro manage the company themselves, rather they want good people to do it on their behalf.

The last quarter of the cash flow quadrants is the I, which stands for Investor. Investors are those individuals who make money work effectively and efficiently for themselves. The main difference between them and the B quadrants it that the investors have their money working hard while the Big Business people have other people working hard for them. Both groups of B’s and I’s represent the wealthy. The employees and the self employed are the people who work hard for the business people and investors on the right, or wealthy side of the quadrant.

The cash flow quadrant explains the differences between the rich and the working poor. It is useful to describe four types of income that a person can generate as well. The smartest people in the cash flow quadrant are the ones who manage to make the other people and their money work hard for their benefit. That is why they are the wealthy, while the hard working members of society on the left side are the ones who do all of the working on the wealthy people’s behalf. Learning to become wealthy means effectively changing which square of the cash flow quadrant a person occupies.

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The term 'Cash Flow Quadrant' is included in the Accounting edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.