Cash flow: everything about its importance for your business

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It may seem obvious, but it is always good to reinforce that financial organization is essential for the sustainability of any company . And this premise applies to both small and large corporations. To have a long life in the market, cash flow is a basic financial planning and control tool. Understanding what cash flow is Important for the financial health of organizations, cash flow is nothing more than the movement of the company's inflows and outflows of money. Using this tool, it is possible to control resources for the period. Furthermore, cash flow decisively assists in the company's financial projection in the short, medium and long term. Its purpose is to provide visibility to transactions and project the available balance. This way, decision makers can have an exact idea of ​​how much working capital is available. This is crucial information for making day-to-day operations payments, such as staff salaries, taxes and suppliers, among others. It is also essential to know whether there will be cash available to cover the necessary investments, such as renovations, purchase of equipment and other innovations.

Able to honor all commitments is one of the biggest challenges for companies. And for all of this to happen without hassles and surprises, you need to have complete control over your cash flow. What information should be included in the cash flow? 1. Receipts All cash sales by cash, check, cards; installment sales and receipt of invoices, among others. 2. Payments All purchases in cash and in installments, payments of invoices, expenses and other outflows of financial resources. 3. Estimates All receipts and payments expected to occur over a period of at least three months. This is the traditional model. But it is worth saying that the structuring of cash Email Marketing List flow depends on the nature of the business and the needs of each company. The result of cash flow is the available cash balance in the company's cash register or deposited in a bank account. It is calculated by the difference between the total value of receipts and payments actually made, on a given date or period. And at the end of the cash register? The balance of the difference between receipts and payments must correspond to the value of the resources that the company has at its disposal. Generally deposited in bank accounts. How to make cash flow.

The first step is to separate inputs and outputs into categories. In the case of outputs, they can be divided between: Suppliers; Operational expenses; Expenses with raw materials; Commission on products and/or sales; Loans; Salary; Bank expenses; Taxes, among others. The company can create its own categories, including those that best apply to its business. Inflows represent all the money that enters the company, generally coming from sales, which vary from month to month. This is why it is so important to control your cash flow on a daily basis. 2. Keep records After mainly categorizing the outputs, the second step is to record all this information. Correct posting is vital to the quality of cash flow. 3. Analyze the numbers Once the entries are made, the next step is to analyze the data, which is one of the most important steps for decision-making. How to analyze cash flow Keep in mind that the balance shown in the cash register is not necessarily an indication of profit or loss. Ideally, the existence of the final balance should be confirmed every day. But special attention must be paid to very high daily balances, regardless of whether they are in the blue or the red. This may be a sign that the company's finances need to be better organized.