Money is powerful as it
is the core of any business. Cash flow pertains to the movement of
money in the business, such as income, wages, and other expenses.
Without proper cash flow management, all those hard-earned bills may
just disappear into thin air. A strong knowledge of this venture is
an integral part of any small or medium sized business.
To keep your business
running for the long haul, it is a must to know cash
flow management like the back of your hand. Cash flow is divided
into two kinds: positive cash flow, which occurs when there is a
greater amount of money that enters your business as opposed to the
amount allocated for expenses, and negative cash flow, which happens
when there is a greater amount of expenses rather than income.
Cash flow management can
be improved and this can be done by collecting receivables,
tightening credit requirements, increasing sales, pricing discounts,
and securing loans. One financial analyst suggests that there are two
questions you should constantly ask yourself to check if you are on
the right track. First: “What is my cash balance right now?”, and
second, “What do I expect my cash balance to be six months from
now?”
