Cash flow is an essential part of any business. It keeps a track of all the money that is coming and going out of the business on a regular basis. Without cash flow management, the business would not be able to know where the money is coming from and what it is being used for. It is essential to have to a good cash flow management process so that the business can keep an eye on the money that is being received and paid. To have an effective cash flow management process, you must make sure that you know what the components of a good cash flow management process are.


Document all your income and expenditure


This is an important component of good cash flow management. You must make sure that every income that comes into the business is recorded. You should include the name of the business or person that is giving the money as well as their contact information, so that you can be efficient. All expenses that have to be paid will also follow the same pattern. It is important for you to document all your incomes and expenses in case the IRS decide to have a look at your account books. The government will not be interested in looking at your balance sheet, but it will be interested in your cash flow statements and cash account.


Create a cash flow management report


Reporting is an important function of good management. It helps in identifying and analyzing the trends and changes that have taken place monthly, quarterly or yearly. It is imperative for the business to draw a report at least once a month of all the cash inflows and outflows. The reason for this is to know exactly what you are paying for and what you are receiving and accordingly you can compare them with previous reports to see if there are any discrepancies.

One Response

  1. William

    I never use to do any calculations of my expenditure. Thanks for the brief explanation of cash flow management. I’ll follow from now onwards.


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