Maximizing Cash Flow

Cash Flow Forecast

There is a saying in business that “Cash is King”. Part of running a successful business is having good cash management skills. Understanding and managing the cash flow of your business is a vital skill that not only medium and large businesses practice but small businesses practice alike.

It is OK for cash flow to be negative from time to time. However, if it is negative over time it will eat up your cash reserves. And just like in personal finances when cash reverses are low over an extended period of time it puts added stress on the business.

When analyzing cash flow there are a few areas you want to focus on. The first is accounts receivable. The second is accounts payable.

Accounts Receivable (A/R)

Staying on top of accounts receivable and collecting what is due will help increase cash flow. Start with running an A/R aging report and drill down on the detail of what is over 90 days past due and even 60-90 days past due. Sending out collection letters or even making a phone call to collect what is owed will help reduce A/R and increase cash flow.

Accounts Payable (A/P)

Now I know what you’re thinking. ‘Accounts Payable?, isn’t that just going to reduce my cash flow?’ Yes and No. Properly managing accounts payable will two fold when it comes to cash flow. The first reason, analyzing A/P tells you exactly how much you’re paying and what you are paying for. This can lead to questioning certain expenses. Questioning if you can get a better deal for the same item or service or even if you need the expense at all. Reducing expenses will increase cash flow. The second reason is that having proper A/P management will lead to better vendor relationships. Having better vendor relationships can lead to better payment terms. i.e. if you are paying due upon receipt and you have a good relationship you can ask for net 15, or if you are on net 15 terms you can ask for net 30 etc…

Bottom Line 

The bottom line is understanding your numbers and using your numbers to run and guide your business is a best practice to ensure that your business can continue as a going concern. If you find yourself struggling with cash flow or just the cash flow management process feel free to schedule a free consultation at or shoot me an email at


2 comments on “Maximizing Cash Flow

  1. probableman says:

    I run my accounting numbers every month! It definitely helps in keeping perspectives and goals…


    • That’s awesome, if you ever wanted an idea for other financial figures to look at feel free to download a sample company financial analysis report. It’s a report that uses financial statements, and through ratios and calculations, analysis different areas of a business to help monitor the growth and overall health of a business. You can download here:


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