Cash Flow Management – the process of managing your cash inflows and your cash outflows. As a business it’s important to manage your cash flow so you don’t run short of cash to manage the day to day operations of your business. Cash flow analysis can be done easily from your accounting system or an online invoicing system if this feature is being offered. Cash Flow reports generate cash inflow from expected receipt of payment for client invoicing and cash outflows for expected payments for vendor payments and other expenses. When cash from clients does not come in as expected you can adjust your payments going out for vendor payables.
Managing cash flow includes staying on top of expected incoming payments from clients, when a payment is not received as expected this is the time you can contact your client to find out why payment is not being made and determine when a payment will be received so you can adjust your cash flow information. Communicating with your clients in regards to payment is important as this is the time you can determine if there are any issues that would result in a future nonpayment. Getting a payment commitment from your client allows you to adjust your outgoing payment schedule to keep your vendors paid so they continue to provide the goods and services you require to keep your business operating.
A Cash Flow Management system that generates from your invoicing system means you don’t have to re-enter you cash inflow numbers. The reduction of double entry saves time and reduces the chance of error. No matter how small or large your business understanding your cash flow situation is important in continuing the day to day operations and to help you grow your business by utilizing your cash in the best possible way. Projecting your cash flow is as important as your mission statement and your business plan along with any other processes a business uses to plan for their future.