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Cash Management

Glossary of Cash Management Terms


Payables are the cash you pay out to run your business. As a business owner, you will make payments to suppliers, employees, the local and Federal government for taxes, vendors, licensing agencies, creditors, and any other entities involved with running your business.


Receivables are the income you make from the goods you sell and the services you provide. Receivables might include cash, checks, payments made by credit or debit card, and paid invoices.

You must manage both payables and receivables efficiently and effectively in order for your business to run smoothly. It's more than simply making more money than you spend--how you collect payments, invest business cash, manage business accounts and credit, and handle back-office operations all contribute to your business cash flow.


Forecasting is the act of looking at the entire financial profile of your business and using that information to plan for the future. Forecasting can help ensure you meet future inventory needs, pay vendors and creditors on time, survive slow seasons and economic fluctuations, invest cash wisely, and have the cash on hand to provide the liquidity and flexibility you need to run your business successfully. Many businesses use an automated system to reconcile accounts and track investments, as well as electronic worksheets and other forecasting tools.

Cash Flow

This is the money that is transferred into and out of your business. You might have cash flowing into your business from sales, credit lines and loans, and investments. Cash is paid out in the form of expenses and investments. Cash flow statements also included factors such as depreciation of business assets and taxes. Your business cash flow indicates the health of your company, and affects how eligible your business is for credit.


Your business' liquidity refers to how easily your company's assets can be converted to cash and bought or sold. "Liquid" investments are ones that allow you to access your money easily when you need it. Business assets like inventory or prepaid goods and services (such as insurance) are not considered liquid because they can't be bought or sold easily.

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