MANAGING YOUR CASH FLOW

The Financial Literacy Initiative is a national platform to enhance
financial education and comprises over 40 platform partners from the
financial sector. W SE
Every month, the Financial Literacy Initiative offers you useful and

valuable tips and information on financial matters for businesses.

THIS MONTH:

MANAGING YOUR CASH FLOW

WHAT IS CASH FLOW?

Cash flow is basically the money that flows in and out of the business. This includes paying taxes, salaries, suppliers, creditors, savings as well as receiving cash through sales, loans etc. One of the reasons why an SME can fail is because of poor management of its cash flow.

HOW TO MANAGE YOUR CASH FLOW:

1. Always prepare a cash flow projection, which will help you to plan for your cash flow.

2. Keep a record of your finances by noting them down, this will help you to better control your finances and keep track of the cash flowing into and out of your business.

3. Make it a priority to open a reserve account that will be used for unexpected emergencies for your business.

4. Do not combine your personal and business finances in one account. You may end up using cash that was intended for the business growth for personal items.

CUSTOMERS SALES VAT STATE
less
COSTS
equals
SUPPLIERS & TRADING PROFIT TAX
EMPLOYEES less
INTEREST BANKS
less
TAXATION
CASH FLOW DIAGRAM less
DIVIDENDS SHAREHOLDERS

equals
PROFIT RETAINED

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