What You Need To Know About Cash Flow
Cash flow is one of the important concepts for businesses. This concept is the name given to cash in and out of an enterprise or company’s vault within a month. Positive cash flow, as the name implies, refers to the money entering the cash register in the current situation. This input can be expressed as the money received from the product or service. In the negative flow, you get money from your cash register for payments. The concept of cash flow is important for small or large enterprises. Now let’s take a look at how we can use this concept of Economics in our business.
The Importance Of Cash Flow For Enterprises
Recently, in the financial world, you can often hear this phrase: Cash is everything. The sine qua non of cash. Many businesses want to achieve positive cash flow regardless of scale. Because this means that the company or the business has received money. At the same time, cash flows indicate that the financial situation in an enterprise is good.
This concept is even more important when it comes to small businesses. For example, large enterprises or holding-level institutions have more opportunities to create money for themselves. But small businesses usually provide this flow of money directly from the customer. For this reason, businesses need to establish a strong customer relationship in order to provide positive flow. When it comes to small businesses, it’s easy to sink. This is usually caused by not having enough cash.
What Is The Place Of Cash Flow In Marketing?
In fact, marketing is a tool where cash flow can be strongly supported. If you are not a newly established business, you need to introduce your business to attract customers and provide cash for your business. In this case, you need to take advantage of marketing methods. The marketing methods you will use are entirely up to you. However, it is recommended to use methods that reduce the negative flow as much as possible and increase the positive flow. Naturally, no one wants their earnings to decrease as their spending increases.
Plan Your Short Term Cash Flow When Starting Business
We all have a dream of having a self-sustaining business. However, self-sustaining is a very difficult process in the early stages. You know there are a lot of things to watch out for when you start a business. And that’s exactly why you set off with short or long-term plans. The point you should not forget here is that the money flow is included in your plans. If you ignore the cash flow situation, we have a bad news. It is inevitable that you will soon sink.
Resources that will find the cash for yourself when you start a business can be very difficult. Especially considering that you will have a small number of customers in the first months. What you need to do at this point is to find alternative cash channels to yourself without being overwhelmed by despair. For example, you can try modern marketing methods to increase your customer number.
Can you profit without cash flow?
Usually, when financial concepts are involved, there is confusion. When we talk about cash flow, there are some questions about profit. “I don’t get cash in my office, but I’m still making a profit.”Although this sentence sounds ridiculous, it actually points to the fact that the concept of cash flow and profit are different concepts. Profit is a condition that can be achieved when a futures contract is made.
Let’s imagine you’re selling products in bulk. The company buying from you has planned to pay in two months. In this case, you will not have the cash flow from the sale. Because there’s no physical money in your vault right now. But you are selling and you have the product and you will get the money in the future for profit. As this example shows, when profit is a concept related to accounting, the cash flow is a financial concept.