Cash flow management overview

Cash flow management is a vital function for any business or organization having to pay bills, employees, and vendors. Having a concise overview of cash flow, how cash functions, and the needs for cash flow management may escape many business owners.

I highly recommend reading this article and re-reading this article "Cash Flow-In and Out" by Nancy Blondin, CPA, writing on the Website "Tennessee Society of Certified Public Accountants".

Here is an excerpt on managing cash flow:

"Cash is needed to acquire supplies, equipment and other assets that a business requires to accomplish its business purpose. Cash is needed to pay wages, operating expenses, taxes, interest and principal to creditors, and dividends to stockholders. It allows management to carry on its business. A thorough understanding of cash and how it flows in and out of an organization will allow you to answer the following questions:

1. How much cash does my business have?
2. How much cash does my business need to operate, and when is it needed?
3. Where does my business receive its cash, and spend its cash?
4. How do my income and expenses affect the amount of cash I need to expand my business?

If these questions can be answered, you are truly managing your cash flow."

The article covers:

• Cash Needs and Policies
  
• Financial Statements
  
• Net Income vs. Net Cash Flow
  
• Cash vs.Liquidity
  
• Cash Budget
  
• Techniques
  

Read portions of the article on cash flow, bookmark it, and read it again.