Top 10 Things to Improve Cash Flow

As a CFO, one of the most critical responsibilities is to manage the cash flow of your organization. Solid cash flow management will help ensure your business runs smoothly and avoid financial predicaments. Here are the top 10 things that a CFO can do to understand and improve cash flow:

1. Maintain an Accurate Cash Flow Statement: Start by ensuring a more accurate cash flow statement. It will help you identify how much cash and cash equivalents are going out and coming in every month.
2. Keep Tabs on Receivables and Payables: Keep track of how much money your organization owes on an ongoing basis, how much it needs to collect, when it collects, and from whom.
3. Improve Cash Collection: Set up a system to invoice on time, offer early payment incentives, and follow up on any unpaid bills on a timely basis.
4. Reduce Accounts Payable Timing: Negotiate with vendors to pay invoices in installments, ensuring a more efficient cash management strategy, rather than paying full payment at the outset.
5. Streamline Inventory Management: Steer clear of overstocking and obsolete inventory, which will become a liability. Instead, put processes in place, such as an automated ordering system, to ensure stock is available as and when needed.
6. Utilize Discounts with Vendors: Negotiate with vendors to offer discounts on bulk purchases of supplies, reduced fees, better payment terms, and other cost-saving measures.
7. Implement End-to-End Budgeting: By carefully budgeting expenses and monitoring cash flow right from the outset of your financial year, CFOs will get a clear picture of cash management through the entire fiscal year.
8. Identify Cash Strapped Areas: Identify where cash inflow is coming from, and where it’s going out from. If you can’t identify all of your expenses, ensure you re-evaluate what’s causing the cash flow problem.
9. Generate Accurate Forecasts: Utilize accounting tools to consider future economic scenarios to project cash management requirements, which will enable businesses to better navigate what’s to come.
10. Eliminate Finance Inefficiencies: Develop and implement financial policies and procedures which result in efficient business processes, reducing redundancies, mistakes, and costly delays.

By employing these ten key tactics, you will be better equipped to manage and improve the cash flow of your organization. Remember that it pays to be proactive in addressing cash flow concerns, rather than being reactive after a problem arises.

Good luck, and happy cash-flowing!

‍