your cash register or at the bank, and which you can use at any time. Find out everything you need to know about this essential element in the life of a company.
Cash flow is the indonesia phone data main asset available to companies to cover their current expenses and finance their activity: employee salaries, rent, inventory purchases, taxes, communication costs, etc. Cash flow management therefore has the objective of stability at least, and growth at best.
A positive cash balance is a key factor of stability, proving good financial management for a company and guaranteeing it a safety net to meet its commitments. Conversely, cash flow is said to be in deficit or negative when expenses exceed revenues, leading the company to live on credit. This is a situation that every business leader tries to avoid. Hence the interest in knowing how to make a cash flow plan.
Cash flow management allows you to assess the company's working capital, i.e. the resources it has available to cover its expenses without resorting to borrowing. It allows you to control your costs and expenses using precise indicators, to predict your growth in the short and medium term.
A company's cash flow is easily measured: it is simply calculated by subtracting the working capital requirement (the amount including tax of all charges or investments to be paid) from the available working capital (all revenue collected).
Managing your cash flow, however, is not simply about monitoring your bank statements. Cash flow management involves other activities such as developing forecasts to anticipate unforeseen events and plan for future investments.
Cash management is part of financial management , but should not be confused with it. Financial management also deals with the company's strategic long-term investments, while cash management deals with the short-term use and monitoring of funds.
Main objectives of a cash flow plan
A cash flow plan serves many purposes, the main one being to plan the growth of a business through effective management of its cash flows. This growth objective is based on several more concrete secondary objectives.
Guarantee the solvency of the company
The solvency of a company can be considered as its trust capital with banks, investors and customers. Good cash management ensures the margin that the company has to be able to pay its debts and provide the services it offers. This is an important concept both for banks that could block the company's assets or request late payment fees, but also for customers who will tend to flee a company that they consider precarious, if only for the assurance of an efficient after-sales service.