Efficient Cash Flow Management Guide: Forecasting Your Future Cash Flow Rates

Cash Flow Management

Efficient cash flow management depends on how long it will take between your business gathering your income and paying for your resources. You should make sure that you can delay the latter for as long as possible while getting everyone who owes you money to pay as quickly as possible. This way, you can achieve a good inflow rate that doesn’t lead to delayed payments.

How To Better Manage Your Cash Flow

Cash Flow Projections

A rule of thumb is to prepare cash flow projections annually, monthly, or if you think it will serve you better, weekly. These projections, while not accurate tallies, could give you an idea of the health of your current cash flow and how long will it take before trouble starts brewing.

Cash Inflow

The first step is to add the cash on hand which your business already has by the time the period begins to those that you are about to receive. You might have to ask various sources for this information, like your finance department and service representatives. Generally, though, you have to ask how much you’ll be getting and when.

Cash Outlay

According to, the next step is to measure the cash that you will be shelling out in payments:

“That means not only knowing when each penny will be spent, but on what. Have a line item on your projection for every significant outlay, including rent, inventory (when purchased for cash), salaries and wages, sales and other taxes withheld or payable, benefits paid, equipment purchased for cash, professional fees, utilities, […], and cash dividends.”

Receivables versus Payables

CFM Tip 22The next step is to improve the rate at which you can get your receivables while managing your payables so that it doesn’t get delayed. One such tip is to encourage your debtors to pay faster on one hand and taking advantage of creditor payment terms on the other.

You can also learn many valuable management techniques from reliable cash flow management software like Cash Flow Mojo®. Always remember to steer your business fleet as far away from debt and delayed payment as you can.

(Article Information and Image from How to Better Manage Your Cash Flow,