What is cash flow management and how does it impact a business?

What is cash flow management ?

Cash flow management is the process of controlling and managing the inflow and outflow of cash in a business. Simply put, it is a system that maintains a balance between business income and expenses. This ensures that there is sufficient cash on hand to manage necessary expenses for the business. Therefore, it can be said that the main goal of cash flow management is to ensure an adequate flow of cash to meet business expenses.

Start cash flow management in four simple steps!

1. Identify sources of income: Identify the daily or monthly sources of income for the business.

2. Identify expense categories: Keep track of how expenses are occurring in different areas of the business and maintain control over them.

3. Control expenses: Avoid unnecessary expenses and strive to increase profits. Believe in the principle that "saving one taka is equivalent to earning one taka!"

4. Finally, analyze the results: Finally, analyze the cash flow to make business decisions based on the current situation.

How does cash flow affect your business?

If cash flow is not managed properly in a business, its downfall is only a matter of time! Issues in cash flow or the supply of money mean that you are not receiving enough cash to meet essential business expenses, putting the business at risk. However, with effective cash flow management, your business will not only survive but also thrive.Let’s take a look at the impact of cash flow management across various sectors of a business:

• Business Stability: Through cash flow management, you can easily manage the regular expenses of the business, such as employee salaries, rent for the store or office, and timely allocation of sufficient funds for purchasing stock or inventory.
• Sustainable Development: Properly managing cash flow ensures that a business is sustainable. It allows for sufficient funds for new investments, making it easier to develop or purchase new products, engage in marketing efforts, and enter new markets.
• Transaction Management: Any business transaction is related to cash flow management. If cash flow management is not proper, coordinating transactions becomes challenging.
• Reduce Risk In Business: Through cash flow management, sufficient funds are prepared to cover unexpected expenses in the business. This reduces business risks and allows for proper management during adverse situations.
• New Investment Opportunities: When cash flow is tightly controlled, it creates opportunities for new investments in the business. This paves the way for future growth and expansion.

Learn the techniques for managing cash flow in business. 

There are several effective techniques for managing cash flow that are crucial for business owners to learn. Let's discuss a few effective cash flow management techniques-

1. Learn Forward Planning

List the potential expense categories and amounts for the future, and keep sufficient cash ready to cover them. A plan for potential income and expenses for the next 6 to 12 months should be created so that you know how much money will be needed in each category.

2. Think About Cost Reduction Plans.

Keep an eye on reducing business expenses. Cutting unnecessary costs is one of the simplest ways to manage cash flow. Consider how to reduce fixed expenses such as rent, utility bills, etc.

3. Start Collecting Business Receivables. 

Pay off those who owe you money. For those who owe you, arrange to collect the outstanding amounts quickly. If receivables remain unpaid for too long, it will negatively impact your business's cash flow. Ensure timely invoicing and send reminders for outstanding payments when necessary.

4. Do Not Spend Before the Due Time.

To avoid excessive spending, it is best not to make any major purchases before the scheduled time. Some expenses can be postponed to maintain a normal cash flow.

5. Seek Bank Loans or Investor Assistance

If your business needs funds, you can discuss obtaining money through bank loans or from investors. However, it is essential to use this money properly and make decisions based on previous transaction management.

Cash flow management with HishabPati app.

In today's digital age, it is crucial to use software to make cash flow management easy, accurate, and fast. HishabPati is an accounting app that can simplify the control and management of your business's cash flow. Here are ways to make cash flow management easier using HishabPati:

• Business Report Generation: With HishabPati, you can generate weekly, monthly, and annual reports, which are extremely useful for cash flow analysis.
• Cost Management: With the HishabPati app, you can easily track your daily expenses. This allows you to know when and how much you have spent, enabling you to find ways to reduce expenses.
• Calculating Due Receivables: You will benefit from quickly collecting dues from your customers, as HishabPati keeps track of customer receivables. You can send reminders to customers for their outstanding payments. Additionally, you can provide instant payment reminders on each transaction invoice.
• Analyzing Profit and Loss: You will obtain accurate profit or loss calculations based on products and product parties. An accurate profit and loss assessment will give you a clear understanding of your cash flow and provide the opportunity to manage it effectively.
• Real-Time Update: The HishabPati app provides you with real-time updates on cash flow and any other information. This allows you to know the accurate status of your business at any moment.

If you can manage cash flow effectively, making business decisions will become easier, and unexpected issues can be avoided. With the HishabPati app, you can easily manage cash flow, ensuring the improvement and success of your business.

Start your journey with HishabPati in three simple steps!

• Sign up on HishabPati: 

First, visit the HishabPati website and create an account for your business. Alternatively, download hisabpati app from google play store and register. Registration in HishabPati is quite easy & complete free.

• Set up your company: 

After signing up, first set up your business profile by providing the necessary information as the owner. Then, set up essential business aspects such as inventory, units, purchases and sales, outstanding balances, invoices, and transactions. After that, start updating daily transactions.

• Enjoy the various features of HishabPati: 

Once you start managing your business accounts with HishabPati, make sure to utilize the necessary and unique features, such as invoicing, barcode scanning, units, and expense management. To understand how to use HishabPati and its features in detail, watch demo videos in Bengali on YouTube. 

Digital ledger for income and expenses – HishabPati demo.

HishabPati's subscription fee starts at just 99 Taka!

HishabPati is Bangladesh's easiest and most affordable accounting app. Its subscription fee is divided into monthly and annual terms, with three budget-friendly packages available.

• 01. Basic Package: The Basic package is completely free! This means you can try out the app without purchasing a subscription.
• 02. Premium Package: The monthly subscription fee for the premium package is just BDT.99. And there's a 17% discount on annual subscriptions! It will cost only 999 taka in a year!
• 03. Business Package: The monthly subscription fee for the Business package is just 199 Taka. Like the Premium package, the annual subscription also comes with a 17% discount, making the yearly cost only 1990 Taka.

Know about all features of packages today in details & choose your desired package. Good luck with your business!