Cashflow management

Know exactly when cash is coming in and out, so you can make the right decisions at the right time.

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Meaning of Cashflow

Simply put, cashflow is the flow of cash coming in and cash going out. Cashflow isn’t the same as profit. Profit is the difference between income and costs, whereas cashflow consists of the actual flow of money. When selling a product/service you generate revenue. However, there hasn’t been a flow of money since the consumer hasn’t necessarily paid yet.

 

For funding institutions, such as banks, the cashflow is the most important part, not the profit. The borrower should be able to pay the interest and amortization, which is only possible with a positive cashflow.

 Insight in the cashflow of an organization is the key to a healthy financial operation. How much cash do we have at the moment, and how much in three months from now? Will my current cash position be enough to survive the low season? Can I hire extra personnel? Can I stock extra inventory?

EBITWISE summarizes the relevant data in our financial dashboards, to provide the necessary insights to make well informed strategic decisions.

Cashflow Forecast

The ability to forecast the cashflow is something we, at EBITWISE, find an important factor in operations. To know your cash position in three months gives you the tools to make the right decisions for the future. Cashflow forecasting can be difficult. Revenue will result in an incoming cashflow, but only at the moment the consumer actually pays the bill. And the VAT paid by the consumer, needs to be paid to the tax authorities. Costs are an outgoing cashflow, but not until you actually pay the money. However there are also income and expenses outside the standard operations, such as a loan payoff. Alongside the current in and outgoing cashflow, the forecast needs to take the future flows into account as well. They are based on assumptions, so a well made forecast is a necessity.

 

Knowledge of the business combined with financial knowhow are both required in order to create a cashflow forecast strong enough to base strategic decisions on.

 

EBITWISE is your partner in this process and supports you with a clear up-to-date financial dashboard. We will make sure that the cashflow forecast is always based on the latest numbers and projections.

 

Our service ‘’cashflow management’’ is included in our FinOps product. We strongly believe that this is an essential part of finance for a scale-up ready for the next step.

 

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