Cash Flow Management

The process of monitoring the amount of money coming into and going out of your company is known as cash flow management. Enterslice has worked with clients of all sizes and across various industrial sectors. This knowledge enables us to provide services that are tailored to your precise needs. Our priority is to..

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Cash Flow Management

When it comes to financial management, it is sometimes claimed that "cash is king" in all types of businesses. Whether your organisation is growing or having trouble, managing cash flow is crucial. According to a survey, more than 60% of lucrative businesses ran out of money. Without effective management, a company that utilises a lot of its working capital may experience a cash shortage that prevents it from paying suppliers, paying employees, or purchasing supplies. Since there is a problem with getting money from clients, there is always a delay in paying the suppliers. The only answer is cash flow management.

What is Cash Flow Management?

By using a method called "cash flow management," an organisation may keep control of how much money comes in and goes out. The fundamental goal of cash flow management is to ensure that the amount of money coming in exceeds the amount going out, keeping the company in surplus. Cash flow management also performs a supporting role in ensuring that surplus funds are prudently invested or kept to provide the expected returns on the cash that has been blocked. Every business depends heavily on its cash flow. All the essential functions could halt whenever the money stops moving.

Ensuring that the company does not experience a cash deficit is the primary objective of cash flow management. No company should be in default on its debt obligations. In a similar vein, it must not record any long-standing debtors. The occurrence of such situations is a sign that the cash flow manager has to take responsibility.

It is crucial to make clear that the cash flow is not the same as or equal to profits. Even though a company makes money, it can still be losing money. A method for bridging the gap between a vendor's or bank's payment as well as receipt from customers can be referred to as cash flow management. It arranges the payments and receipts so that paying the vendors is possible in accordance with the credit agreement and also after taking the customers' payment cycle into account.

What is the Importance of Cash Flow Management?

There are several benefits to cash flow control and prioritizing effective cash flow management.

  • Predict Cash Flow Management

    - Knowing when you will have deficiencies in advance is the first and most apparent benefit of controlling cash flow and working capital. If you have a robust system in place, you may anticipate the deficiencies weeks or even months in advance, giving you the time to develop a new strategy.

Here are a few illustrations of forecasting shortfalls:

  1. A couple of weeks delay in a shipment in order to avoid paying customs duty.
  2. Make a collection effort to pay off the unpaid invoices.
  • Reduce Stress -

    Many tensions are relieved by managing cash flow or cash flow management. Many business owners have trouble paying their debts because they are anxious about not knowing what is happening and whether or not things will turn out okay. Even when things don't appear good, it is still best to be aware of what is coming.
  • Know the right time to grow -

    Knowing exactly how much money is spent on growth is made possible by managing cash flow. Simply because your Profit and Loss Account indicates that you have some spare cash does not guarantee that it will come into your life. When you keep an eye on the cash flow over the course of weeks and months, you will be able to determine exactly how much money should be spent and how much should be saved for future growth.
  • Gaining Leverage -

    You gain influence when you handle your financial flow well. A proper cash flow management system will support you and set up a trust if you need a bank credit extension to help you through a setback or if you need to convince a supplier to grant you a reprieve for half a month without interfering with administration.

Banks frequently want to see this type of agreement, especially if you can clearly demonstrate when you will be able to repay the funds. Suppliers are much more likely to be flexible if you let them know exactly how you will pay and when, as opposed to ceasing communication as most businesses do during difficult times. These people require your services and will be more willing to cooperate with you through the good and bad times if they feel they can trust you.

  • More accurate -

    The budget is thought to be less precise than cash flow management. Budgets describe what you intend to do, but cash flow predictions represent what really happens, even if it differs from the plan you had at the start of the year. Nearly everyone believes that we can manage everything by not controlling cash flow. However, by managing your cash flow, you'll feel better about your financial situation.

Preparing a cash flow statement

The health of your business can be judged by your cash flow statements. They demonstrate that your company is strong and able to run continuously at all times.

  • Cash from operating activities

    : How much money is coming into your company from operating activities? This could be a concern if this amount is less than net income or is negative.
  • Cash earned by investing

    : This figure ought to be negative. This includes the cash your company has spent on product development and internal improvements. These two actions are samples of the kind of activity we're talking about.
  • Cash from financing activities

    : This section shows how much cash your business uses to settle debts. Among them are potential dividends.
  • Net charge in cash

    : The amount of cash your business receives or loses due to investing and financing activities is the net change in cash.
  • Net money

    : You can draw attention to the beginning and ending balances of net cash. Applying the net change in cash to the starting balance yields the ending balance. You can see how much money you have on hand in the final balance.

Benefits of Outsourcing Cash Flow Management

Businesses may need to outsource their cash flow management for several reasons. A company can be expanding but not yet have the funds to hire a financial controller, or it might not have the necessary expertise on its finance staff.

When you give control of your cash management to Enterslice, you can access our knowledgeable group of certified accountants. Additional benefits include:

  • Reliable information

    : We'll assist you foresee when money will be needed so that you can plan to have the necessary resources ready in time.
  • Working capital

    : We will work with you to find ways to increase your working capital, which will help you become more resilient and provide funds for future expansion and growth.
  • Credit Control

    : We'll ensure your invoices are sent out on time and take action if a payment is late.
  • Better decision

    : Enhancing your short-term and long-term cash forecasts will help you make better decisions.
  • Cash management practises

    : We'll guide your team on how to enhance your in-house cash management practices.

How can you Protect Your Company from Future Cash Flows by Cash Flow Management?

Through effective cash flow management, one can safeguard their business from future financial flows in the following ways: 

  • Cut expenses

    - Cost-cutting rather than trying to increase revenue will have a quicker impact on your principal focus. You could, for instance, cancel bonuses and extend payment schedules. The number of employees could also be decreased by excess or consistent loss. Additionally, you could speak with creditors and ask for more favourable terms.
  • Performing credit checks -

    Perform credit checks before hiring new clients. It is important to recognise businesses that frequently pay late or miss payments. Additionally, you should have prospective clients sign contracts that detail your payment policies.
  • Give discounts for early payments -

    By providing discounts for early payments. You can induce your customers to make payments on time. The corporation must use the early payment discount when a cash emergency arises. If you do it frequently, the profit margins will be drastically different.
  • Decrease your payment terms -

    Reduce your payment terms from 60 to 90 days. Imagine that you are giving your consumers short-term unsecured loans when you permit them to pay for your goods and services in arrears. That is a wonderful business idea.
  • Instead of purchasing, consider leasing -

    Think about renting rather than purchasing furniture, equipment, automobiles, real estate, IT, and media communications technology. The benefit of leasing over buying is that you will just have to make small periodic payments. Your money will start to flow as a result. Additionally, you can guarantee the rent amount.
  • Increase your costs -

    For fear of losing prestigious clients to rival businesses, businesses frequently hesitate to raise their prices. However, a slight cost increase may have an impact on your entire revenue. By providing bundled goods or services, you can go beyond the clients' resistance to a value rise.
  • Make prompt payment of invoices -

    Many businesses fail to send out invoices quickly enough or follow up on late payments. Every business needs to send out invoices in order to collect payment. If they don't have the bills paid on time, they won't have the money to make any more payments.
  • Financialize your invoices -

    To get cash right away. One should work with a finance company. These businesses provide funding for a price in exchange for your outstanding debts.
  • Obtain outside funding-

    For short-term credit, you may turn to banks or credit lending organisations, or you could use alternative funding sources, such as your own account, partners, investors, and peer-to-peer lending.

Hire CFO Support Services

CFO Support Services will check for everything that could endanger the business and will collaborate with you to find solutions. Your CFO will look for ways to help you meet your financial obligations and will examine all incoming and outgoing funds to identify areas for improvement and cost reductions.

Estimates of cash flow will be created by the CFO. These projections will notify you of any impending potential cash shortages. Then, if necessary, you can arrange for extra borrowing. It will be helpful when deciding whether to hire additional employees, increase your prices, discover new suppliers, or submit a significant contract proposal.

Cash Flow Services Offered at Enterslice

We can provide you with access to a professional that believes in working with you as a partner when you outsource your needs for cash flow analysis to us. We concentrate on comprehending your complete business at the beginning of the collaboration. This knowledge enables us to provide services that are tailored to your precise needs. Our priority is to provide excellent solutions that assist you in achieving your company objectives.

To give a general picture of our cash flow management services, which include a wide range of areas, the following are some of their highlights:

  • For financial leverage reports, we will offer full help.
  • All of your investment growth will be regularly monitored by us.
  • We will offer you a cash flow analysis to help businesses make decisions about expansion and purchases.
  • Our experts will provide comprehensive sales and revenue statements upon request.
  • We'll assist you in reducing risk and expansion.
  • You don't need to put more effort into your infrastructural resources because we have all the most recent software and IT support for cash flow management tasks.
  • We provide a budget-friendly package for SMEs and Startups.

Outsource Cash Flow Management Services to Enterslice

A well-qualified workforce and a certified Chartered Accountant are required for in-house cash flow management. You will save money and have a better understanding of how money moves across an organisation if you outsource cash flow management services to Enterslice. You must have had a lot of trouble obtaining an updated financial outlook. As your outsourcing partner, we'll give you up-to-date financial projections on a regular basis. Based on the rolling forecasts for the following two to three years, we will also give you cash flow projections. As a provider of cash flow management services, our main goal is to free you up to concentrate on your core business operations.

Listed below are a few factors that make our clients choose us above other financial management partners:

  • The expert core group comprises chartered accountants, financial analysts, process management consultants, and accounting experts.
  • Best practices for outsourcing management are available at Enterslice.
  • Secure data and physical infrastructure.
  • On-time and under-budget project completion are our specialities, and we will help you in all situations of cash flow management.

Frequently Asked Questions

Management of cash flow is a crucial component of every firm. A positive cash flow guarantees that the company can pay employees' salaries on time and will have the resources necessary to grow and expand. Additionally, there are options available for timely tax and vendor payments.

Small business cash flow management monitors and assesses the quantity of money received minus the business expenses. This aids in projecting how much money you will generate and spend in the future as well as in managing your firm in times of crisis.

There is a broad response to this. Different companies use various tactics to control their cash flow. Here are some suggestions:

  • To save costs, lease or buy second-hand goods instead of brand-new ones.
  • Develop the practice of routine maintenance and fixes rather than replacement.
  • Reduce upgrades and take into account open-source software.
  • Contract out all of the tasks that cannot be completed internally.

In Enterslice, you can outsource work related to cash flow management. You will receive help from our experts managing your financial flow.

The term "cash management" covers a broad range of financial activities that involve the collection, usage, and handling of cash. Cash flow, investment, and liquidity are further factors. Various financial products, such as certificates of deposit, treasury bills, and money market funds influence cash flow.

The following is a list of various tools for cash management:

  • Short-term instruments include Treasury Bills, mutual funds, money market instruments, certificates of deposit (CDs), etc.
  • Checking Account.
  • Saving Account.
  • A tool for long-term, low-risk savings.

Meeting working capital needs, addressing unorganised costs, planning capital expenditures, appropriating funds, planning capital expenditures, starting investments, etc., are some of the goals of cash management.

The goal of cash flow management is to accurately predict a company's future cash demands by monitoring and controlling the amount of money that enters and leaves the company. It is the routine practice of tracking, evaluating, and optimising daily net cash receipts minus expenses.

Manage incoming client funds using receivable solutions and point-of-sale terminals included in cash management services. Paying your investors, vendors, and workers are among the services included in cash management.

The fundamental distinction is that cash flow describes the net change brought about by inflows and outflows of cash over time.

Considering the Factors that impact your cash flow:

  • Receivables in credit. Sales that haven't been paid for in full yet are represented by accounts receivable.
  • Credit terms
  • Credit policy
  • Inventory
  • Payments due and cash flow.

Forecasting, mobilising and managing cash flow, maintaining banking relationships, and investing excess cash are the four components that makeup cash management.

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