4 steps to help you manage your cash flow

How much money is flowing in and out of businesses, money trends and how to prepare for an enterprise’s financial stability. While going through the process of optimizing cash-flow management, here are the 4 key components to keep in mind: 

1. Measuring the profit. You have to include depreciation, accrual accounting concepts and other non-cash items, while Cash Flow only takes into account cash or cash-like income and costs. 
2. Current assets and liabilities are due within one year therefore, current liabilities should preferably be lower than current assets. 
3. Operational expenses. The cash flow should be sufficient to cover operational expenses. When running a negative cash flow, you will have to sell assets, lower your cash position or find additional financing options. 
4. Ratio Analysis is often used by investors to assess companies’ financial situation. A well-maintained profit and loss statement, cash flow statement and balance sheet will enable yourself and investors to calculate these ratios.

Check your investment readiness now on Social Finance Academy. 

Training: The session on “Optimizing Cash Flow Management” was run during the Leveraging Innovative Finance Together event, organized for sustainable energy, water, and sanitation social entrepreneurs
Trainer: Mo Hom Noon – Business and Financial analyst – One to Watch
Date: 26 February 2019
Location: Yangon, Myanmar