A Quick Guide to Cash Flow Management

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?”