{"id":38,"date":"2023-08-22T02:07:44","date_gmt":"2023-08-22T02:07:44","guid":{"rendered":"https:\/\/paysprint.ca\/blog\/?p=38"},"modified":"2023-08-23T18:45:44","modified_gmt":"2023-08-23T18:45:44","slug":"5-tips-to-manage-your-cash-flow","status":"publish","type":"post","link":"https:\/\/paysprint.ca\/blog\/5-tips-to-manage-your-cash-flow\/","title":{"rendered":"5 tips to manage your cash flow"},"content":{"rendered":"

A cash flow projection for the coming year is like an early warning system<\/p>\n

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Cash is king\u2014it\u2019s a common saying in the business world. But surprisingly few entrepreneurs take steps to manage their cash flow so that they don\u2019t wind up with an empty bank account and nothing with which to pay the bills.<\/p>\n

The good news:\u00a0Cash flow management<\/a>\u00a0is easy to improve with a few simple steps.<\/p>\n

Below are five tips to help you manage your cash flow, and to better prepare you for the future and help your business avoid financial challenges.<\/p>\n

But first, its important to understand the concept itself.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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What is cash flow?<\/h2>\n

Simply put, cash flow refers to the amount of cash that goes in and out of a company\u2019s coffers during a given period of time.<\/p>\n

Normally, you will find three types of cash flow on a\u00a0cash flow statement<\/a>:<\/p>\n

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  1. Cash flow from operations.<\/strong>\u00a0This is the money generated, spent or lost in the course of a company’s main business activities.<\/li>\n
  2. Cash flow from investments.<\/strong>\u00a0This is the money coming in or going out of the company that is related to the purchase and sale of\u00a0long-term<\/span>\u00a0investments such as property, buildings and equipment.<\/li>\n
  3. Cash flow from financing.<\/strong>\u00a0This category includes all flows related to raising cash as well as paying back debts to investors and creditors.<\/li>\n<\/ol>\n

    Although not usually listed on a cash flow statement, one could add a fourth type:\u00a0free cash flow<\/a>. That\u2019s the cash that a company has left over after accounting for operating expenses and capital expenditures. It should not be confused with net cash flow, which is listed on a cash flow statement, and refers to the sum of the three categories above.<\/p>\n

    Can cash flow be negative?<\/h2>\n

    Since a company\u2019s net cash flow is a sum of three different positive or negative figures, cash flow can turn out to be negative. When this happens, it means there is more cash leaving the company than there is cash coming in.<\/p>\n

    This situation can spell financial trouble, of course, but it need not always be negative in the colloquial sense, explains\u00a0Karanjit Singh Kochar<\/span>, Manager, Major Accounts, BDC. \u201cIt can also be a sign of seasonality,\u201d he says, referring to businesses like a snow clearing company or ice cream shop that have high and low seasons, resulting in higher expenditures and lower revenues depending on the time of year.<\/p>\n<\/div>\n<\/div>\n

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    Is cash flow the same as profits?<\/h3>\n

    Cash flow is different from profits, although both concepts are related.<\/p>\n

    When your company makes a sale, it does not necessarily get paid right away. Conversely, when you buy a product or service, you don\u2019t necessarily pay right away. In some instances, for example when a client goes out of business, you may never see the payment for a sale.<\/p>\n

    Cash flow refers to the money that actually flows in and out of your business during a given period, while profits equal your revenue minus your costs.<\/p>\n

    \u201cProfits also differ from cash flow in that it will sometimes be affected by\u00a0non-cash<\/span>\u00a0items like\u00a0depreciation<\/a>,\u201d explains Kochar.<\/p>\n<\/div>\n<\/div>\n

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    The cash flow statement: A short intro<\/h2>\n

    The cash flow statement is a financial document detailing where a company\u2019s money is coming from and where it is going over a given period. More specifically, it records:<\/p>\n