Cash Flow Management

Cash flow management for business is the process of monitoring, analysing, and optimizing the net amount of cash receipts minus the cash expenses. Net cash flow is an important measure of financial health for any business. It helps the business owner to analyse optimum cash needs; this can be achieved by estimating the monthly cash needs and identifying the sources from where these can be met.


Cash flow management involves:

  1. Knowing when, where, and how your cash needs will occur,

  2. Knowing the best sources for meeting additional cash needs and

  3. Being prepared to meet these needs when they occur, by keeping good relationships with the debtors and creditors.

Why it matters?

Helps with managing limited cash/resources effectively.


Facilitates planning for timely debt repayment.


With resources available, timely investments can be made.


Helps in estimating fluctuations in business.


Helps in recognizing current patterns and making predictions.


Helps to develop both short-term (weekly, monthly) cash flow projections to help the business owners to manage daily cash.

What documents are needed?

Sales register


Cash outflow or expense receipts (Purchases, expenses like electricity, repairs, transportation, fuel, etc.)


Bank account statements (For recording bank transactions)


Cashbook (if maintained)


Debtors register (if maintained)


Creditors register (if maintained)


Miscellaneous receipts (if any)

How it helps?

It helps in avoiding cash shortages, caused by a gap between cash inflows and outflows.

It helps in budgeting your cash requirements and in a way helps to control the business expenses and setting targets for your sales.

Helps with managing limited cash/resources effectively, facilitates planning for timely debt repayment. It also helps in recognizing current patterns and making predictions.

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