FREE online courses on How to Manage Cash Flow - Chapter 1

 

Cash Flow Cycles

 

Cash is the most liquid of assets and it represents the lifeblood for growth and investment. In order to generate cash, we must efficiently and effectively manage the activities that provide cash. These activities include billing customers as quickly as possible, disbursing payments only when they come due, collecting cash on overdue accounts, and investing idle cash. Therefore, managing cash flow involves several objectives:

 

·         Accelerating cash inflows wherever possible.

·         Delaying cash outflows until they come due.

·         Investing surplus cash to earn a rate of return.

·         Borrowing cash at the best possible terms.

·         Maintaining an optimal level of cash that is neither excessive nor deficient.

 

This course will attempt to outline how these objectives can be met. We will try to answer the following questions:

 

·         How much cash do we need to run our business?

·         How much cash is locked-up in other current assets?

·         How long does it take to collect our cash from customers?

·         How much cash should we hold?

·         How do we cover cash deficits?

·         How do we identify problems with cash flow?