Edition 15
Controlling cash flow for business growth
CIMA

Introduction


CIMA – the Chartered Institute of Management
Accountants

The world’s leading professional body for management accountancy

Has over 172,000 members in 168 countries

Offers the most relevant financial qualification for business
Management accountants



Involved in all sectors of industry
Often in high level roles
Forecast, monitor trends and control cash flow

 Cash is vital to longer term trading

Cash inflow from eg sales

Cash outflow from eg costs of goods or labour


More money spent than received = negative cash flow
Cash is a ‘liquid asset’

Available for investment

Avoids having to seek credit or loans

 Balances cash inflow against cash outflow
 Lack of cash can:

 lead to business failure affect the business’ reputation

 Businesses need to manage cash flow

Pay as little interest as possible
 Pay debts on time; consolidate at low interest

Negotiate payment terms with suppliers

Avoid offering discounts

Make better use of assets
 eg hire out warehouse space

 Reduces uncertainty
 Helps to predict and plan for the future
 Ensures enough cash to cover debts or possible shortfalls
 Reduces unnecessary costs
 Makes cash work for the business