Cash Flow Management

What Is Cash Flow?

Cash flow is defined as:

“The amount of money entering and leaving your business over a given period of time”


Cash flow management is defined as:

“Monitoring/ management of the money entering and leaving your business over a given period of time”

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How To Improve Cash Flow?

Following are some of the ways to manage your cash flows effectively:

  • Receive payments from customers on time
  • Negotiate a right deal for investments
  • Pay off debts timely to avoid debt cycle
  • Timely order stock to avoid burden
  • Check the market fluctuations while purchasing raw material
  • Use marketing tools to make profit
Why Is It Important?

Cash flow management is vital for a firm as:

  • It gives a picture of cost vs revenue
  • Keeps a check of paying bills whilst making profit
  • It balances the timing and amount of cost and revenue
  • It helps to forecast potential risks in cash flow
  • It helps in drafting future plans for the company
Objective Of Cash Flow Management:
Maximize Value Of Funds
  • Invest in long term projects
  • Diversify market & customers
  • Monitor cost per unit
Minimize Cost Of Funds
  • Enhance productivity
  • Use cost effective methods
  • Invest in technology
Cash Inflow Vs Outflow:
Cash Inflow
  • Payment From Customers
  • Bank loans
  • Interest On Savings/Investments
  • Shareholder Investments
Cash Outflow
  • Purchase Of Raw Materials
  • Salaries Of Employees
  • Purchase Of Fixed Assets
  • Loan Payments
  • Taxes
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