6 tips to ensure good cash flow management in your company

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The success of any company inevitably depends on balanced cash flow management. This means that it is an organized financial management that covers all areas, processes and aspects of the company, always with the aim of maximizing profits .


On the path towards this ultimate goal, there are several objectives that must be met to foster increased profits: resource optimization; process improvement; relationship development; value creation; increased sales; increased profitability; error reduction; and so on.


With the increasing complexity associated with business and the financial world, it is essential to know the basics of good cash flow management .


But what is cashflow?
The difference between the inflow and outflow of capital over a given iceland whatsapp number database of time is known as cash flow. Ensuring constant inflows and outflows of capital is not always easy. And to maintain the sustainability of your business, it is essential to have capital.

6 tips to improve your company's cashflow management
1. Financial planning is the foundation
It all starts with a complete and detailed plan. A plan allows you to know (to a greater or lesser extent) what will happen, how it will happen and what the results will be. Ultimately, it offers a comprehensive view of the entire operation of the company , which will allow you to identify flaws, obstacles and opportunities, and thus make critical decisions with knowledge of the facts.

In this sense, it is imperative to establish metrics that allow us to assess the success or failure of the financial plan, as well as to identify its positive and negative points. The so-called KPIs ( Key Performance Indicators ) help to measure performance, facilitating decision-making to calibrate and improve certain processes or tasks, if necessary.

2. Identify problems and implement solutions
As mentioned in the previous point, having a financial plan will help identify problems that impact cash flow early, by carrying out frequent analyses of the company's processes. Even so, it is possible (and even likely) that some problems will arise without prior warning.

One of the difficulties that organizations often face is the massive amount of information available from different sources, with no direct communication between them. One way to mitigate this situation is to centralize information with a tool that allows data to be collected, organized and presented quickly and easily.

On the other hand, having all this information at your disposal will help you identify, among other things:

- the company's main resources;

- the processes and tasks that can be optimized;

- the critical points of the company's operation;

- bottlenecks in processes;

After identifying these elements, the next step should be to resolve the problems encountered , or at least those that are a major impediment to the company's growth or normal functioning. This should be done based on the available data.

3. Evaluating metrics is evaluating the company’s success
Another key point for good cash flow management in a company is to know the degree of success, both in the past and in the present, and to try to predict the future. To do this, it is extremely useful to use metrics, or KPIs, which should be defined in the financial plan.

The establishment of these metrics must be accompanied by a calendar for analyzing the results, to allow understanding not only the performance at each moment, but also the evolution of that performance. By correlating performance with certain events - such as the introduction of new processes or the creation of a new department - it will be possible to understand the impact of the circumstances. Furthermore, without KPIs, it is impossible to know whether the objectives are being met .

4. Trust in data
Information is the connecting element present in all the points discussed. Data is the best friend of decision-making and should be the basis that guides all the steps in a company. With the right information, cash flow management will be more effective and less risky, allowing for a clear vision of the company's path.

Nowadays, any company has at its disposal a virtually infinite amount of data originating from various sources: management software, such as ERP or CRM, internal and external communication channels, online databases and competitor websites, the company's own resources, etc. On the one hand, this is an extraordinary advantage, but on the other hand, it generates a need for analysis that can become overwhelming.

However, the contribution of data to identifying, analyzing and solving problems is invaluable and cannot be undervalued.

5. The advantages of technology for cash flow management
Nowadays, it is practically impossible to find a company that does not use technology to support cash flow management. This is justified, on the one hand, by the increasing connectivity between systems and organizations and, on the other, by the simplification that technologies offer.

Using technology allows you to automate processes, save time, reduce errors and increase productivity , among many other things. Therefore, it is possible to understand that investing in financial management software is an investment in the health of the company.