Cash flow management –– the bedrock of your business

Cash flow management –– the bedrock of your business

One of the major objectives of every business is to be profitable. On the forefront of this, is also the goal to survive in the longest term. Periodic projections and monitoring of sales, revenue and profits are essential, but a major bedrock of continuity and growth for your business is an effective cash flow management system.

Cash flow management involves an intentional cycle of forecasting business cash flow, generating cash through sales, monitoring cash receipts and payments, and accurately recording cash movements –– inflows and outflows.

A positive net cash flow fuels undisrupted business operation as well as creates a leverage to take advantage of growth and expansion opportunities. Adequate cash flow is also essential for extensive capital investments that in turn, drive increased operations and profitability.

Without cash, it is almost impossible for a business to survive; you need cash to pay suppliers, purchase inventory, pay taxes, compensate employees, and settle other operating financial obligations. The need to improve business cash flow is therefore essential and critical for every business.

The cash flow problem

Major cash inflows are driven by sales to your customers, realized in the form of cash; the timing of which is very important. A delay in cash receipts for sales made on credit can be detrimental to normal business operations.

Your business would face significant pressures if expected cash inflows do not materialize in time amidst increasing demands for cash outflows to vendors and suppliers. For example, if a material payment due from a customer’s receivables account is delayed, but payment to a vendor for tools supply falls due, a business with no spare cash would face an insurmountable cash flow problem.

Also, In the event of uncertainties or major unfavorable external factors such as crises, economic meltdowns, force majeures, or other operation setbacks, a business can suffer a major cash crunch.

How to improve business cash flow

To reduce the risk of operation bottlenecks due to cash flow problems, your business needs to devise effective strategies to improve cash flow.

Improving business cash flow entails proactively projecting cash scenarios and effectively managing working capital. Match short term cash inflows with short term cash outflows and likewise for long term extensive cash flow requirements. Adopting an effective receivables management system would enable your business to identify and classify customers who pay on time and those who delay or default on payments when due. Proper risk assessment and customer management reduce the likelihood of a severe credit risk occurring, commonly known as bad debt loss.

Record credit sales accurately, invoices customers as soon as possible, and monitor past due receivables to reduce the possibility of cash being withheld from the business. Follow up with customers to ensure payments are made when due, and also, resolve any conflicts in a timely manner.

Retain more cash within your business by negotiating more favorable payment terms with suppliers; however, make sure not to default on payments to vendors so as to maintain a good reputation and sustain relationships.

Consider alternative cash flow solutions with Accord Financial

There are other effective alternative solutions to a major business cash crunch problem, some of which include:

  • Outsourcing the entire accounts receivable management process to agencies who execute with professionalism and expertise in managing aging receivables and bad debt scenarios.
  • Utilizing accounts receivable financing; use your accounts receivable balance as a collateral to obtain external financing.
  • Factoring your eligible accounts receivable; get upfront cash payment from a factor agency in return for fee payments.
  • Engaging alternative supply chain solutions to settle vendor payments; get advance cash payments through a 3rd party agency to your suppliers for inventory and other capital expenditures for a fee or interest.


The professionals at Accord work with you to understand your business needs and proffer the best cashflow management strategies to help you succeed. We provide cashflow solutions through accounts receivable financing, accounts receivable management, asset-based lending, small business loans and other supply chain finance solutions.

Do you have a question or ready to take the next step?

  • Turn on Javascript!