What is Cash Flow Management?

The process of forecasting, collecting, disbursing, investing, and planning for the cash a company needs to operate smoothly is termed Cash Flow Management aka Cash Management

Valley of Death

The period during which start-up companies experience negative cash flow as they upgrade operations, construct their customer bases, and become self-financing.

Cash Flow Cycle

• The time lag between paying suppliers for materials and receiving payment from customers for the product or service is termed as Cash Flow Cycle.

Five Cash Management Roles of the Entrepreneur

• Role 1: Cash Finder
• Role 2: Cash Planner
• Role 3: Cash Distributor
• Role 4: Cash Collector
• Role 5: Cash Conserver

Cash Flow

Cash Budget

A “Cash Budget” shows the amount and the timing of a firm’s cash receipts and cash disbursements over time.

A cash budget illustrates the cash flow into and out of the small business and allows the owner to anticipate cash shortages and surpluses.

There are five basic steps in completing a cash budget:

1. Determine a minimum cash balance