Cash Flow Management Critical Analysis

Table of contents

Cash flow management is a vital force to the success of any business, large or small. Some have compared cash flow management to the life source of the human body, the blood. Much like blood, cash keeps a business going, and cash flow is the circulatory system of a business. With this in mind, it is important to understand that managing cash flow goes beyond the generating of sales revenue. This article will aid in providing understanding of the components of cash flow management, as well as provide several key elements in successfully managing cash flow.

What is Cash Flow

Investopedia. com defines cash flow as a revenue or expense stream that changes as cash account over a given period. Cash inflows usually arise from one of three activities; financing, operations, or investing. Cash outflows result from expenses or investments. In layman terms, this simply refers to how cash moves in and out of a business. In order for a business to be successful, the goal is to insure that your inflows of cash, on a long term basis, exceed your long term cash outflows.

Understanding Cash Inflows and Outflows

Cash outflow refers to the net amount of cash that flows out of a business based on the ongoing operations of that business. These uses of cash are usually expenses, such as payment of salaries and wages, creditors and suppliers, investments, long term business purchases, loan repayment, dividend repayment, income tax, corporation tax, and even lawsuit settlements. Cash inflows, the optimal goal for a business, are the exact opposite. Inflows are any transfer of money that comes into the business’s possession. The net cash amount that flows into a business due to the ongoing operations of the business, which is most commonly revenues, is where a business would see an inflow of cash. Some examples of cash inflow would be payments from customers, investors, lenders, sale of company real estate or equipment, as well as legal settlements.

It is logical to believe that if cash isn’t available a business can fail. This is also true if the circulation of cash is irregular and unpredictable. In order for cash flow management to be effective, a business must address both short and long term plans. With short-term cash flow management, a business relies mostly on the effectiveness of keeping good records, via a record keeping system. By utilizing a good record keeping system, a business insures quick and accurate access to revenue and expenditure transactions.

There are several different tools in which to facilitate this need, which are the use of bank statements, cash flow forecasts, reports on debt collection, and accounts payable reports, to name a few. Routine monitoring of these types of documents is important to avoid insufficiencies. Creating routines for managing the cash flow will allow a business to make forecasts that will assist in their company’s growth. The key is to continuously make sure that the business has enough sales, at a profitable price. Three main concepts to remember are:

  1. Plan in advance in anticipation of certain changes in income and expenditures.
  2. Monitor to make adjustments to business and financial operations.
  3. Manage to “average” out the peaks and valley of cash flows.

The Use of Cash Flow Statements Financial statements help businesses successfully manage their cash flow. Such financial statements as balance sheets and income statements provide a picture of the assets and liabilities of a business. A cash flow statement is different, in that it operates as a checkbook that reconciles the balance sheet and income statement.

This statement records the business’s cash inflows and outflows during a given period. It provides information on whether or not the revenue on the income statement has been collected, however it does not show all of the business expenses because some of those expenses that have been accrued have to be paid right away. There are three main components to a cash flow statement which include cash flows from operation, investment, and financing activities. Below is a sample cash flow statement.

In conclusion, managing cash flow effectively is not something that any business should and/or could afford to take lightly. Successfully planning and monitoring of financial statements are an effective way to ensure that a business in on the right track toward their financial growth.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyHomeworkGeeks
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Business and administrative studies
Customer 452773, February 23rd, 2023
Business and administrative studies
excellent work
Customer 452773, March 12th, 2023
Business and administrative studies
looks good thank you
Customer 452773, March 3rd, 2023
Business and administrative studies
Excellent work ,always done early
Customer 452773, February 21st, 2023
Social Work and Human Services
Great work I would love to continue working with this writer thought out the 11 week course.
Customer 452667, May 30th, 2021
Looks great and appreciate the help.
Customer 452675, April 26th, 2021
Criminal Justice
This has been the greatest help while I am recovering from an illness. Thank your team so much.
Customer 452671, May 2nd, 2021
Business and administrative studies
Customer 452773, March 3rd, 2023
Customer 452591, March 18th, 2021
Thank you!!! I received my order in record timing.
Customer 452551, February 9th, 2021
Business and administrative studies
Thank you
Customer 452773, March 19th, 2023
thank you so much
Customer 452749, June 10th, 2021
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes


eskişehir escort
- Korsan taksi Antalya


eskişehir escort
- Korsan taksi Antalya