Cash flow, the movement of money in and out of your business, determines whether you have the liquidity to meet expenses, invest in growth opportunities and weather unforeseen challenges. Without a firm grip on cash flow, even profitable businesses can find themselves in financial trouble if they don’t have enough working capital to cover day-to-day operations. Conversely, effectively managing cash flow allows businesses to plan for the future, avoid unnecessary borrowing and maintain financial flexibility. Effective cash flow management is needed for the health and sustainability of any business.

Managing cash flow involves monitoring inflows from sales or investments and balancing them against outflows like salaries, rent and supplier payments. The key is to ensure that the timing and amount of cash coming into the business align with its financial obligations, so there’s always enough liquidity to keep things running smoothly. Failure to manage cash flow effectively can lead to late payments, a poor credit reputation and, ultimately, business failure.