How to Manage Cash Flow?

Cash is said to be the King when it comes to Financial Management of a Company.

Without Cash/Capital no business could be started or continued.

Cash Flow is basically the movement of Cash or the Funds in and out of your business. The Cash Flow should be tracked either weekly, monthly, or quarterly.

The time when payment is to be made to suppliers and employees and the time when payment is to be received by your customers, the time period between both events which causes a shortage of cash is the problem that could be solved by Cash Flow Management.

Cash Flow Management is simply delaying payments to be made by the company for as long as possible while encouraging everyone who owes you money to pay it back as soon as possible.

In this article, we will be seeing how one can Manage the Cash Flow easily and what are the tactics or methods that can help you out with your cash flow problems-

Measuring the Cash Flow 

To manage cash flow, measuring the cash flow and preparing cash flow projections for the future with an accurate Cash flow projection can alert you about the trouble before it hits the business.

Cash Flow Plans are educated guesses that include- analyzing the history of your customer payments, upcoming expenditure plans, and your vendors' patience.

You can start your cash flow projection by adding cash on hand at the beginning of the period with other cash to be received from various sources tracked with disbursement technology. It includes obtaining information from various departments.

The information obtained must be able to answer the following questions for each case of customer i.e. How much cash in the form of customer payments? Interest earning? Service fee and other sources are we going to get in and when?

The second part includes detailed information on the amounts and dates of all kinds of cash outlays.

Collecting Receivables 

For cash flow management basic idea is to improve the speed with which you can turn inventory into receivables, and the receivables to cash.

There are some techniques that might come handy to do this-

• Provide Discounts to customers that pay their bills rapidly.
• Deposit payments by the customers at the time orders are taken.
• Do credit checks on all non-cash customers
• Get rid of old, outdated inventory
• Issue of invoices and follow up immediately when payments are coming, follow up must be done.
• Track the accounts receivables and Avoid slow-paying customers.

Tightening The Credit Requirements

In a Business, one often needs to give credit to the customers. Doing research beforehand to determine the risk of credit to each customer could help the business.

To manage cash flow in small business check the references. Are they paying bills on time? Is this business doing well? Are they having any cash flow problems?

This way you can play safely while giving out credit.

Manage the Expenses 

To manage cash flow efficiently keep checking your expenses. Whenever you see the expenses growing faster than the sales, one needs to examine the costs thoroughly to find some places where they can cut the costs or control them before it gets out of hand.

You can also use the following tips, to use the cash of your business wisely-

• Take your time while paying off the creditors, use the time provided you to make the payment.
• Use electronic funds to make the payments, on the due date itself.
• If you are having trouble while payment, let your suppliers know about your financial situation and ask for time, try to assure them, and build trust and understanding.

Increase the Sales 

New customers are always important for growing business, but it can take time and funds to get more customers. 

Hence, Increasing Cash Sales for better cash flow is easier said than done.

Being said that your existing customers could be a great target audience here, Analyze what they are buying and why? This information could lead you to increase your own profit margin and hopefully generate more cash hence, helping you manage the cash flow of your business.


All these tips must have answered your question of how to manage cash flow efficiently. Als the easiest way to keep a check of your business and help your business with Cash Flow management is to keep a track on your Cash Flow, monthly or weekly.

This will not only help you create the Cash Flow your business needs but will also provide you in creating better Cash Flow projections you can rely on and make the business decisions and taking care of your existing bills.