Management Of A Company’S Cash Flow: How To Best Ensure It?


Cash flow problems have already bankrupted several companies. A large number of corporations and SMEs have been forced to put locks on their doors due to poor cash management. Any company wishing to maintain its viability and sustainability therefore needs to improve its cash management. This makes it possible to prevent difficulties and anticipate possible problems. But how do you best manage a company’s cash flow? Discover in this article the essential and effective techniques. Cash refers to the difference between working capital (FR) and working capital requirements (WCR). It is the average between the available assets and the short-term debts of a company. It is positive when the working capital covers all possible needs related to the operation of the company. To ensure better management, it is essential to monitor cash flows on a daily basis.

Use the tools of technology To better manage your cash flow, you must also choose the right technology tools and make good use of them. Today, technology offers simple, practical and very precise management tools. No more pulling your hair out to calculate the ratios yourself. These tools will do the work for you and provide you with reliable forecasts. For effective management, you have the choice between: A flow management table on a classic spreadsheet (Excel for example); Online cash management software; An online management provider. If you think you can optimize your cash management as much as possible, you can also opt for a wealth management firm . Anticipate problems as much as possible Most of a company’s cash flow problems stem from customer outstandings and supplier maturities.

Reduce Inventory And Increase Sales

To avoid them, you must identify receipts and disbursements and consider the ideal solutions, as far in advance as possible. A handy tip is to summarize fixed charges and other possible expenses to get an idea of ​​when Denmark Phone Number List you might run out of cash. It is true that any cash flow problem is a source of worry and stress. But it’s less stressful to know that in 2 months you have to face a shortage of liquid than to find yourself in the red all of a sudden. Because you have enough leeway to prepare for it. Set up a cash flow forecast To better manage your cash flow, you need to keep an eye on financial transactions and plan the cash budget in the short, medium or long term, thanks to a cash flow forecast. Define an annual cash budget

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It is a summary of the inflows (financing, sales forecasts, etc.) and outflows (purchases, investments, payment of receivables, etc.) planned for the next financial year. It allows you to have a good head start on possible problems that could jeopardize the cash flow. With a well-defined annual budget, it is easier to avoid unnecessary disbursements and preserve the available assets that the company has. Establish a cash flow forecast Anticipating cash receipts and disbursements for the following year is good, but it is not enough to manage cash flow well. Indeed, during the exercise of the provisional budget, it is important to check that the company manages to respect the forecasts made, if the expenses do not exceed the expected disbursement margins.

Shorten Customer Payment Times

This is where the usefulness of the cash flow plan comes in. The latter is presented as a dashboard. The table is updated on a monthly or weekly basis and presents a summary of financing needs as the financial year unfolds. Thus the company can easily adjust its availability in relation to its debts and maturities. As you have understood, the cash flow forecast is the basis of your company’s financial survival. It ensures that financial commitments can always be met or not. Only you will have to solve the problems yourself. To be sure to make the right decisions, it is important to consult the advice of a wealth management advisor . Systematize cash flow control The cash flow or “Cash Flow” indicates the cash inflows and outflows of a company over a given period.

An optimized cash flow ensures perfect business success. It makes it possible to identify profitability problems and provide appropriate solutions. To ensure good cash management, it is advisable to systematize your cash flow. Bank communication software and cash management software are very effective for this purpose. With banking communication software, you can make your transfers and retrieve account statements for effective financial monitoring. They make it possible to follow bank flows systematically and in detail. The use of cash management software is for the same cause. However, it is mainly involved in making balancing decisions and investing funds. In addition, cash management software is useful for applying discovery authorization and for negotiating credit.

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