UCE CU Blog Site

 Cash flow is described as ‘the life-blood’ of every business. It is also said that cash flow is very much important, it is more important than the ability of the business to deliver goods promptly. If customer is not happy and goes away, the next customer can be pleased and the business can be regained. But if cash flow depletes, the creditors will have a sway on the business and the business is out of the race track. This explains the importance of ‘Cash Flow’.

 What is Cash Flow? This is simply defined as ‘movement of money in and out (inflow and outflow) of the business’. Following are some of the areas which need to be carefully analyzed to determine the health of the Cash Flow chart.

 Accounts Receivable: In many cases, sale is made on credit. The customer collects the material with a promise to pay within the specified period. If the customer delays payment, the cash inflow in to the business reduces. Adelaide Debt Collection simply is the amount which is due from customer and has to come in to the business in the form of cash.

Credit terms: This is the time given to the customers to pay. The best method is to send the bill along with the goods.

Credit policy: This is the terms and conditions for allowing credit. The policy should not be too rigorous nor should it be too generous.