All About Cash Flow Management

As a business owner, one of the most important aspects of your business you need to master and maintain, is cash flow management. Cash slow represents the total amount of money that is transferred in and out of a company.

Managing your cash flow as an entrepreneur will put you in a position that will enable you to run your business better.

What you need to know about cash flow management:

Nowadays cash is king. Running a business means that you need to ensure that your business has healthy cash flow in order to stay afloat.

Without cash, profits are meaningless.

“Poor cash flow management is causing more business failures today than ever before,” says Philip Campbell, a CPA and former chief financial officer of several companies and author of ‘Never Run Out of Cash.’

You should be tracking your cash flow either weekly, monthly or quarterly.

Make sure that you analyse cash flow to make sure that you have enough cash each month to cover your obligations in the coming month.

A smart business owner ensures that they have laser focus on drivers of cash, in addition to profit or loss. Remember that a positive cash flow is needed to generate profits, so structure your business to grow and increase profits. Plan for growth and the related cash outlays in advance.

Tips on how to improve cash flow management:

Tighten credit requirements. Focus on running your business on a cash basis, rather than a credit basis. This should improve cash flow significantly.

Increase sales. Work hard to improve sales.

Offer discounts for early payment. This is one way of encouraging your customers to pay for services using cash, which will improve the business’ cash flow.

Track your cash flow results every month. Make sure that you know how much money’s coming in and how much is going out every month.