We called the amount of the money get in & get out to a a firm is called “ cash flow” .The balance of the money transaction realization is essential for the firm to survive. The firms money output are expenses while the input of money are the operating income, credits and supplementary capital.

There are different types of money transaction, but through the cash flow the firms case must be always fullfilled. İf the money case is getting empty even it is not wholly empty there is a “negative cash flow “. İf a firms money case is wholly empty, we can say that the firm is bankrupt.

Operational protif

If a firm provide  the total cash flow from the sales of goods and services , we can define the firm has a operational profit  and this firm has a strong structure.  The firm may need supplemantary capital to grow .  This kind of capital can be ralized by the selling of  stock  assesment . The capital insertion provide growth unless  if  it is used for the loss of negative cash flow.

Emplyee payments, payment to subcontractor ,rentals, energy expenses, office costs, the interest and commission of credits,  credit back payments, the share profit payments to partners , raw material buyings,  lawyer and consultancy payments, advertisement payments, tax payments, social security payments, equipment expenses  are the money outputs.

All kind of credits included overdraft , customer prepayments, donations, the incomes from selling properties,  are the income sources.

Cash flow management

A healty firm must  convert all its  incomes to cash.  A firm  even tough very profitable if it can’t pay the salaries on time , there is  a lack of cash flow management.  İt is called liquidity management of the money in&out come.  A good liquidy management predict  the right time of income and out come of the firms , and anticipate the incomes more than outcomes. If delays occurs at incomes, it must be rapidly provided by supplementary incomes.

Customers slow payment, seasonal fluctuation or the decrease of sales because of competition, sales under the costs,  high fix costs, credits wrong maturity managements are the reasons of bad cash flow management .

The worldwide istatistics  shows the bankrupt  through SME’ s is % 80  because of wrong cash flow management  .