Importance Of Cash Flow Management

1. Importance Of Cash Flow Management

2. Cash flow management is the most important aspect of every business. A healthy cash flow ensures that the business can pay salaries on time and have funds for the growth and expansion of the business. Resources are also available for paying vendor bills and taxes on time. Regular analysis of business finances ensures that one can project the future cash flow with accuracy and take necessary action. Following up on client payments and managing the accounts receivables effectively, ensures the timely flow of cash, as required by the business. Notable Facts: Poor cash flow management may lead to business failure.

3. 4 Rules of Cash Flow 1. Growth sucks up cash  Growth costs cash. It's a matter of working capital. The faster you grow, the more financing you need. 2. Have a cash flow projection  What do you expect your cash balance to be 6 months from now? This one question will transform the way you understand your business. 3. Understand receivables The money client and customers owe you is called "Accounts Receivables". And every dollar in accounts receivables is a dollar less cash available for the business. 4. Cash is King Cash keeps a business alive. No cash = No business. Traditional Options For Increasing Cash Flow 1. Credit cards - High interest rates and fees for mismanagement make credit cards a dangerous option. 2. Bank Loans - Extremely low approval rates, along with hidden fees and personal gurantees, makes bank a time sucking, low-probability option. 3. Equity - Requires giving up of ownership, a percentage of profits and partial control of the company and the decision-making process.

4. When cash flow is freed up? 1. The constant worry about paying bills is eliminated.  2. Relationships with vendors are improved. 3. And most importantly, business owners are now able to focus on running and growing a successful enterprise. Above All: Cash flow management depends upon financing and not on measuring profits. The positive result of operating activities reflects the company’s operational performance. Measure the essential cash flow rates that help in the effective decision-making process undertaken at the small and medium-sized enterprises. The company needs to have enough cash on hand to float its operations for the duration of the collection period. Because when the business goes out of cash, operations will simply cease. What Invoicera offers you? Using anonline invoicingsolution is the key to managing business finances more effectively.  The solution provides features like late fees and automatic payment reminders for getting timely payments from clients.  With Invoicera, one gets to receive online paymentsfrom multiple payment gatewayshelping clients to pay faster and reduce the quote-to-cash cycle. SOURCE : The Importance Of Cash Flow Management [Infographic]

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