Cashflow refers to the movement of cash into and out of a business or individual’s financial accounts. It is a crucial measure of financial health and sustainability, as it reflects a business or individual’s ability to generate cash to cover expenses and meet financial obligations.
Positive cash flow occurs when the amount of cash coming into an account is greater than the amount flowing out. In contrast, negative cash flow occurs when the amount going out exceeds the amount coming in. Cash inflows can include revenue from sales, investments, loans, or other sources. Cash outflows can include rent, payroll, taxes, and other costs.
Managing cash flow effectively is crucial for businesses and individuals alike, as it ensures that there is enough cash available to cover expenses and meet financial obligations. Cash flow management strategies include:
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Forecasting
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Budgeting
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Account receivable management
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Account payable management
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Expenses management
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Financing
