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  February 25, 2018   
Business Services Center
Finance: Managing Your Cash Flow
Home :: Business Services :: Business Services Center :: Finance :: Managing Your Cash Flow

A healthy cash flow is essential for a successful business. Proper management of your cash flow is a very important step in making your business successful. Consider this: If you lose a customer's business, you can always work harder to acquire a new customer. However, if you do not have enough cash to pay your suppliers, creditors, or your employees, you have no business.
  • Understand your cash flow: It is the first step in effectively managing your cash. There's more to it than the movement of money into and out of your business checking account.

  • Analyze your cash flow: It will help you spot some problem areas in your business cash flow cycle. To determine if there is a problem, individually analyze each important component that makes up the cash flow cycle, such as accounts receivable, credit term, credit policy, inventory, and accounts payable.

  • Prepare a cash flow budget: It will help you in predicting your business' cash flow for the next month, six months, or even the next year. Check out our Tools area if you want a template to prepare a cash flow budget for your business.

  • Improve your cash flow: It can help make your business more successful. Accelerating your cash inflows (the flow of money into your business), and delaying your cash outflows (the flow of money out of your business), are key factors for improving and managing your cash flow. In addition, minimize your expenses (your operational cost). The cash flow budget is a handy tool to use in the improvement and management of your cash flow.

  • Fill your cash flow gaps: A cash flow gap represents an excessive outflow of cash that might not be covered by a cash inflow for weeks, months, or even years. From time to time, any business, large or small, experiences the need for more cash than it has. This doesn't mean the business is in financial trouble. If you find yourself in this position, you may have to borrow money or raise funds to fill the gap.

  • Handle any cash surplus: How you handle your cash surplus is just as important as managing your cash flow cycle. With proper cash flow management, you might find yourself with a little extra cash, which you can utilize to earn investment income, pay debts, or invest in your business.

Business Services Center website information and tools, including downloadable templates and forms, are made available to you as self-help tools for your independent use, and are not intended to provide business advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding all your business consulting needs.

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