Cash Flow Management

Cash Flow Management – why is it necessary?



 Small and medium-sized companies open find themselves in challenging situations.
On the one hand, the business’ financial reports show a high profit margin and a
business that provides added value to its stock holders; on the other hand, the bank
account is constantly “walking a fine line”. This upsets the bank manager and leads
to regular uncomfortable conversations.

Business leaders are sometimes unable to translate the profits shown in the accounts into a consistently healthy bank balance! The missing component is organized cash
flow management.

What is Cash Flow Management?

Cash flow management is a weekly/monthly-based work plan, covering six months to a year, facilitating effective management of cash flow – that is cash flow generated from income and expenses. It is vital to identify anticipated income and expenditure over time, as well as reducing debt as much as possible, in order to lower funding costs.

How Do You Correctly Plan Out the Business Cash Flow?

Planning takes place in three main stages:

1. Planning business expenditures:
Each business has set payments on set dates, such as rent, paychecks, property tax, water and electricity, communication costs, loan repayments etc.

Some payments have known costs and others have estimated costs!

2. Planning an’cipated income:
With regard to income, the business leader must take into account all of the expected income for the business over a span of time. This can be income due to sales made, receiving bank loans, a planned equity capital flow etc.

3. Keeping the checking account steady:
After completing stages 1 and 2, the business leader must review any divergence between income and expenditure. Any short-fall is what is required in the form of credit, remembering to allow a 15-20% safety margin to cover late payments and any
other unexpected costs.

Segment Y G Business Development Ltd adding value in business development

Many businesses in Israel have been penalized or shut down for mismanagement of their cash flow. Segment Y G Business Development Ltd has extensive experience in planning personalized cash flow charts for each business, based on their own unique

After creating the cash flow chart, the company supports and monitors on-going activity to ensure the plan is reflected in the actual cash flow, and if necessary, to change and adjust the plan appropriately in order meet the credit limits at the bank
and minimize funding expenses.