Cash Flow Management Strategy Development Tips 

As we continue to face economic uncertainty and other market pressures, staying grounded in fundamental business practices such as cash flow management is essential for understanding how changing conditions affect our ability to effectively reach business goals and permit us to develop a plan of corrective action. 

As experts in helping businesses understand how to optimize and refine their cash flow management processes, we’ve outlined some simple factors that every scalable and sustainable cash flow management strategy should employ.  

An important note: Successful cash flow management depends largely on the industry you’re in. However, these are some common factors that should be considered before you begin. 

What is cash flow management? 

Cash flow management is the process of establishing procedures to monitor, track, analyze and review the amount of money that’s flowing into and out of your business. 

Common cash flow management challenges: 

• Ensuring a sustainable cash reserve 
• Conducting proper financial forecasting and reporting practices 
• Implementing systems that support cash-flow reporting infrastructure 
• Managing and optimizing Accounts Receivable and Accounts Payable 
• Having a forward-looking strategy that sustains rapid growth or change 

Tips to Develop a Scalable & Sustainable Cash Flow Management Strategy 

1. Integrate FP&A tools for forecasting, reporting and scenario planning
2. Focus on technological and operational enhancements
3. Develop a plan and ensure solid business fundamentals before applying for loans
4. Create review processes to keep tabs on cashflow ongoings
5. Turn to a consultant for guidance

Integrate FP&A tools for forecasting, reporting and scenario planning 

Whether you choose to utilize Excel or software, it is vital to integrate solid FP&A tools that have robust forecasting, modeling and reporting capabilities, providing you with the ability to make accurate and strategic predictions based on current cash flow. 

For example, what will you do if your suppliers increase their prices? How will you tackle external market pressures such as inflation and rising interest rates? Will you need to increase employee salaries to attract and retain quality talent in an increasingly competitive market? 

Whatever your situation may look like, integrating the right FP&A tools or software will provide you with unparalleled visibility into your finance function while offering sensitivity checks, pivot marks and helping you reduce costs – no matter what the future holds.

Focus on technological and operational enhancements 

Utilizing financial technology will help you develop a sustainable cash flow management strategy by providing you with robust reporting capabilities, more insight into and control over financial ongoings, and the ability to automate certain processes to save time and cut down on overhead spend. 

If you’ve already implemented a financial system like NetSuite, it is beneficial to automate cash flow management processes such as accounts payable, accounts receivable, international payments, expense management and more.

The robust internal tools from a system like NetSuite will also help you make faster, more informed decisions based on current and future funds.  

However, if you’re in a cash management crunch and haven’t yet implemented the necessary technology, you instead must analyze your business, processes and team to identify where the dead weight is and make strategic decisions about how to progress. 

Develop a plan and ensure solid business fundamentals before applying for loans 

If you’re considering applying for a loan as part of your cash flow management strategy, it’s vital to take the time to ensure you understand the fundamentals of your business and have a well-packaged way of presenting them to potential stakeholders so you’re able to attract quality investments. 

You could have the most unique, creative business out there – but if you don’t have the right modeling, reporting and forecasting procedures to be able to show investors why they should do business with you, you simply won’t go very far.  

Plus, if you have flaws in your business plan, an external influx of cash won’t work. It’ll only delay any cash flow management pressures you’re currently experiencing – and with today’s skyrocketing interest rates, you may end up in an even worse place down the line if you’re unable to pay back accrued debt. 

For best results, take the time to develop a solid foundation for your business and ensure you’re following the proper reporting and forecasting practices so you can put your best foot forward with your cash flow management strategy – regardless of whether or not that includes applying for a loan. 

Create review processes to keep tabs on cashflow ongoings 

Having frequent cadence with regards to cash flow review is essential for developing a cash flow management strategy, as doing so will provide you with an assessment of your organization’s strength and profitability while setting the stage for you to effectively reach future growth goals. 

How frequently you should review your cash flow depends largely on your industry – for example, if you work in the restaurant industry, you’d likely want to review it once per day. SaaS companies, on the other hand, require less frequent cadence – once every week or every other week should suffice. 

Turn to a consultant for guidance 

The best way to develop a sustainable and scalable cash flow management strategy is to turn to a financial consultant for guidance, as they will take the time to learn about your business drivers, goals and needs before creating a strategic plan of action.  

Plus, if developing a cash flow management strategy isn’t already part of your current team’s roles and responsibilities, it may become a burden to your employees – but turning to external guidance will allow you to attribute support exactly where it’s needed and provide your people more time to focus on their day to day. 

Whether you need to establish better reporting practices or redefine business fundamentals in preparation for a loan, a financial consultant will be there to guide you throughout the process of developing the right strategy – no matter which industry you’re in. 

---

Insights By