Five of the Biggest Cash Flow Management Mistakes
Proper cash flow management is integral to any business. Poor understanding of the exact amounts going into and out of the company can lead to poor decision making. Here are five of the biggest cash flow management mistakes businesses often make.
- Overestimating future sales
- Impulse buying during the start-up stage
- Slow follow-up on past due receivables
- Not using a cash-flow budget
- Not keeping a cushion of cash on hand
Strong businesses that have a solid handle on their financial reality, and the cash flow statement is an excellent, if not the best, measure of a company’s ability to generate cash in excess of cash invested. Over a sufficiently long period of time, all businesses have to generate positive cash flow or they will go out of business.
Forecasting the cash flow is a valuable exercise for a business for several reasons. The most obvious is, without a forecast, the executive team has no way to measure success or failure against its targets.
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