Business cash flow management: understanding the basics


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Poor cash flow management has been the downfall of many businesses so it can’t be left to chance. A regular supply of cash is vital to any organisation, so that it can pay salaries and bills, as well as invest in growth. This is why cash flow management is essential in order to have a thorough understanding of where your money is coming from and to project future revenue to secure company growth.

In this article, we provide guidance and answer your most-asked questions related to small business cash flow management: what is cash flow management, what are its benefits and what to do for a better cash flow management?

What is cash flow management?
Let’s start by providing you with a cash flow management definition: it is the process of tracking and optimising your cash flow in a given time period. More concretely, it means analysing the money you receive – generated through sales for example – compared to the money you give out when you pay bills, salaries, taxes, etc.

Cash flow is different from profit, which is the sum of money remaining once all the costs associated to producing and delivering a product or service have been deducted.

When the difference between cash coming into and out of your business is negative at the end of a given period, it means you have less cash than the opening balance you had at the start of that period.

The objective of cash flow management is to avoid this by keeping track and optimising your cash flow, and to ensure that your cash inflows (cash receipts) are always higher than your cash outflows (cash expenses). The surplus can for example help you invest and grow, but there are many other benefits to sound small business cash flow management.

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2022-12-19 20:38

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