Cash Flow Management

Cash flow is the single most important financial metric for a growing business. Profitable companies fail when they run out of cash. Effective cash flow management ensures you have the liquidity to meet obligations, invest in growth, and weather unexpected disruptions.

Cash Flow Forecasting

13-Week Cash Flow Forecast

The 13-week cash flow forecast is the foundational tool for short-term liquidity management. Updated weekly, it provides a rolling view of expected cash inflows and outflows, helping you anticipate shortfalls and make proactive decisions.

Monthly Cash Flow Projections

For medium-term planning, monthly cash flow projections extend the view to 6–12 months. These integrate with your budget and forecast to show the cash impact of your financial plan.

Scenario-Based Cash Planning

What happens if your largest customer pays 30 days late? What if revenue drops 20%? Scenario analysis stress-tests your cash position against realistic risks, ensuring you have contingency plans.

Working Capital Optimization

Accounts Receivable

Invoice timing and payment term optimization
Collection process improvement and automation
Customer credit risk assessment
Aging analysis and bad debt management

Accounts Payable

Payment timing strategies to preserve cash without damaging vendor relationships
Early payment discount analysis
Vendor term negotiation
AP automation for efficiency and accuracy

Inventory Management

Inventory turnover optimization for product-based businesses
Safety stock calculations balanced against cash requirements
Seasonal inventory planning and financing

Cash Flow Metrics

Metric	What It Tells You	Target
Days Sales Outstanding (DSO)	How fast you collect receivables	30–45 days
Days Payable Outstanding (DPO)	How long you take to pay vendors	30–60 days
Cash Conversion Cycle	How fast revenue converts to cash	Industry-dependent
Operating Cash Flow Ratio	Operating cash flow vs. current liabilities	Above 1.0
Free Cash Flow	Cash available after operations and capex	Positive and growing

Cash Management Best Practices

Maintain a cash reserve of 3–6 months of operating expenses
Establish a line of credit before you need it
Review cash position weekly, not just monthly
Separate operating cash from reserves and restricted funds
Automate recurring payments to avoid late fees and maintain vendor trust

Related topics: Financial Reporting | Budgeting | Forecasting

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Financial Resources

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