Cashflow management

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All about cashflow management

Cash Flow is an indicator used in cash flow analysis. In cash management, the cash flow allows a one-off analysis, but also the monitoring of economic trends over several years. Its calculation defines the level of financial health of the company.

Cash flow measurement is used to analyse a company's cash flow. It is an essential analysis indicator for the management of a company. It is often used in conjunction with cash flow (CAF). Although these two indicators can be used in similar contexts, their calculation methods are completely different. Confusing cash flow with cash flow from operations is a misnomer.

The higher the cash flow, the healthier the company. Its positive evolution is therefore a very good thing.

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What analyses can be carried out on the basis of the cash flow?

Cash Flow is presented in cash flow analysis tables. It is also referred to as liquidity flow. In fact, it is a question of studying the cash available in the company. The indicator takes into account in its calculation the financing of stocks, taxes, but also the time lag between receipts and disbursements.

To facilitate its calculation and analysis, the company must keep its accounts up to date. The use of efficient cash management software provides the accountant and the cash manager with the necessary elements to optimise their analyses. The three cash flow indicators allow the company to be evaluated. You are in a position to know its financial health, while taking the appropriate strategic decisions.

Cash Flow is used at several stages in the life of the company. Analysed on a regular basis, it allows managers to monitor the health of the company in order to make financial decisions that will promote its sustainability. They are also performance indicators used when negotiating the sale of shares or for the resale of the company.

When the company is in economic difficulty, it is also relevant to take into account the cash flow in order to determine the points that have penalised the finances.