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Updated: Feb 2, 2022

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The purpose of the Cash Flow Statement is to assess the quality of the company's liquidity. To evaluate the company's ability to generate revenue. It tells us the cash generated by operating activity, the cash generated by financing, and the cash that pays for investments.

The cash variation = Cash Flow from operating activities + Cash Flow from investing activities + Cash Flow from financing activities

It will be in this Statement business owners will find the answer to their question:

"where did the money come from, and where did the money go to".

The cash flow statement reveals the financial availability to secure and fulfill the company's obligations, while the income statement tells us the economic result, profit (or loss). With these 2 Financial Statements, we can say that a company can show a profit and don't have financial viability.

2. Cash planning

Your business can be financially sustainable if a cash flow plan is in place. Cash flow planning is not easy but it is essential. The cash flow management goal is making sure that you receive more than the expenses to be paid, such as salaries, loans, suppliers, etc.

Do you have problems managing your cash-Flow? We can help you and give you some tips we frequently miss:

  • Do not mix business and personal expenses.

  • ​Ensure a cash reserve.

  • Keep clients and suppliers satisfied while negotiating with vendors before signing the contracts.

  • Reduce costs by avoiding non-essential expenses (representation expenses, etc) and evaluate if a certain expense is an investment or an expense.

  • Efficient and cautious stock management (so that there is neither excess nor rupture);

  • ​Transformation of fixed costs into variable costs, even sacrificing a little the gross margin.

Hiring a CFO can improve your cash flow forecast and will also help with your profitability. The CFO can guide you through the steps you need to do.

So, if you are interested in improving your cash flow management, please contact us and we can schedule a meeting.

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