Cash flow management

What is cash flow management?

Cash flow management is a continuous process of planning, analyzing and controlling cash flows to maintain liquidity and solvency of the company. 

Liquidity management is the fundamental task of financial management to ensure the necessary financial means for smooth running of business processes. It requires a thorough understanding of the balance sheet categories (especially short-term assets and liabilities), financial analysis methods and working capital management techniques. 

Companies that do not practice good cash flow management will not be able to pay wages to workers on time, pay raw material suppliers, or invest in new technology.

The consequences of poor management can be the worker’s dissatisfaction, the uncertainty of supply of raw materials necessary for business operations, and the reduction in credit rating which limits the possibility of borrowing from financial institutions.

The activities that financial management must perform include:

  • asset management
  • business risk management
  • working capital management

These activities are unified within the treasury department, whose organization depends on the size of the company, the staff structure and the activity the company conducts. 

The emergence of a positive cash flow, when the inflows of a period exceed outflows, the treasury department must responsibly manage the surplus of cash. Improper management of surplus funds is avoided by the possibility of generating higher returns on available funds. 

Good cash flow forecasting enables treasurers to determine the optimal amount of cash for short, medium and long-term investments. Since investments cause a lack of liquidity, it is important for the treasurer to have the availability of reliable information so that it can utilize the cash and match the maturities with the planned liabilities.

Our cash flow management services

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Working capital management

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Financial modelling

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Sensitivity analysis

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Liquidity planning